By Mark Pender

NEW YORK (MNI) – A run of negative third-quarter pre-announcements
pulled back MNI’s U.S. capital goods index by a steep nine points to
59.6, still solidly above 50 to reflect year-on-year expansion for
Market News International’s sample.

Readings moved down sharply from multi-year highs. Sales are at a
year-on-year +9.0% for the lowest reading since May. Income of +18.0% is
the lowest since March.

Given the small sample size, at 99 companies for the Sept. 17
four-week rolling period, it’s important to look at longer term averages
which do point to acceleration.

The four-week average for the index is near 70 at 68.4 and is
slightly above the 12-week average, at 67.8, which however shows its
first downtick since January. Sales are at a four-week +15.5%, slightly
above the 12-week at +14.5%.

Capital goods components in Friday’s durable goods orders report
for August are likely to show strength. Orders in July fell back though
shipments, reflecting prior strength in orders, posted a second month of
nearly 2% gains.

Below is a run of commentary:

Glass-products maker Apogee (APOG) reports low prices and lower
volume. The company continues to cite weakness in the non-residential
construction markets. Steel maker Nucor (NUE) reports little if any
strength in the non-residential market.

Citing excess capacity in power generation, filter-systems maker
PMFG Inc. (PMFG) reports that utilities have been reluctant to start new
investment programs. The company expects the North American power market
to lag the general recovery.

Sequential sales at aircraft-parts maker Aerosonic (AIM) remain
flat with year-on-year sales continuing to show mid-teen declines. The
company is still awaiting recovery in the business-jet market.

On the positive side, avionics maker Rockwell Collins (COL) reports
continuing improvement in its commercial systems market. Boeing (BA) has
begun fatigue testing on the 787 and announced another ramp-up for 737
production.

Favorable trends are extending for Texas Petrochemicals (TPCG)
which reports solid demand, tight supply, and stable pricing.

Herman Miller (MLHR) reports significant improvement in its North
American market and says a “sense of momentum” is building in the
company. Orders have risen for three straight quarters with an 8%
sequential gain posted in its August quarter.

By year end, customers will release advanced funding to Frequency
Electronics (FEIM) for three major satellite programs. The maker of
advanced electronics sees margins extending their climb over the next 12
months.

The Gulf spill has given a major boost to industrial-clothing maker
Lakeland Industries (LAKE). The ongoing cleanup has cleaned out the
company’s inventory.

Editor’s Note: MNI compiles its capital goods index based on a
weekly sample of company news and data.

** Market News International New York Newsroom: 212-669-6430 **

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