By Mark Pender

NEW YORK (MNI) – MNI’s U.S. capital goods index fell back 4.8
points in the July 9 period to 60.0, reflecting a mild run of warnings
ahead of the earnings season, according to the results of Market News
International’s weekly survey.

The four-week average, down seven tenths to 62.7, posts its first
decline in six weeks. But the 12-week average, up one tenth to 60.6,
extends an uninterrupted winning streak going all the way back to
January.

Sales are a year-on-year +10.1% with income at +27%. Sample size is
70 companies.

Capital-goods exports in international trade data on Tuesday, given
May’s soft results for total related shipments, may come in flat for a
second month in a row. Such a result could shake up confidence in what
has been one of the U.S. economy’s main strengths during the recovery.

Yet orders, which lead shipments, have been solid and point to
export gains in the months ahead. In an offset, year-on-year currency
effects, based on MNI’s sample, are turning neutral from what had been a
solid low single digit benefit to export sales.

Capital goods components in Thursday’s industrial production report
for June may, based on the results of this sample, extend gains to a
seventh straight month. Again, strength in new orders points to
extending gains for output.

Backlogs are also beginning to come into play. Citing backlogs and
its order pipeline, network-equipment maker CalAmp (CAMP) sees a
sequential 10% rise for sales in its August quarter.

Company news heats up this week with the earnings season. Novellus
Systems (NVLS) has been posting nose-bleed acceleration as have others
out of the chip-equipment group. But companies centered in heavy
infrastructure, including related units of General Electric (GE) and
Valmont Industries (VMI), have been struggling.

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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