By Mark Pender
NEW YORK (MNI) – MNI’s U.S. capital goods index fell back more than
five points in the July 8 period to 65.6, well over 50 to indicate very
strong growth in year-on-year business conditions but breaking well
below trend to indicate slowing growth, according to the results of
Market News International’s weekly survey released Monday.
Sales, at a year-on-year +13.8%, are at a 3-1/2 month low though
still above first-quarter levels. Currency benefits, adding 2% to export
sales, may be peaking in what would be a negative for the second-quarter
earnings season.
Income, at a year-on-year +15%, is well below the first-quarter
rate that touched +30% in what is another negative sign for the earnings
season. Sample size in the July 8 period is 131 companies.
The pre-announcement season has been dominated by warnings with, so
far, positive surprises nearly absent. Companies continue to cite low
levels of activity in non-residential and bumpy activity in aerospace
and, increasingly, in telecom infrastructure.
Network test systems maker Ixia (XXIA) scaled back Q2 guidance
saying the quarter was a disappointment due to delays and cutbacks at
large network equipment makers. The company reports unexpected weakness
in Asia outside of Japan including weakness in China and India.
A decrease in North American sales to academic customers made for a
very disappointing June Q2 at lab furniture maker Affymetrix (AFFX)
where product sales, at no more than $59 million, continue to show both
quarterly and yearly contraction.
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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