By Mark Pender

NEW YORK (MNI) – MNI’s U.S. capital goods index fell 1.4 points in
the Sept. 16 period to 65.7, well above 50 to indicate solid growth in
year-on-year business conditions, according to the results of Market
News International’s weekly survey released Monday.

The assessment of business conditions has been for the last month a
little stronger than underlying details. Sales growth, at a year-on-year
9.6%, is the slowest since the second quarter last year.

Income growth, at a very thin +6.0%, is the slowest since the first
quarter last year. Sample size in the latest period is 223 companies.

Favorable currency exchange is a major plus for the sample, adding
4% to export sales.

Aerospace is a key area of the sample’s strength. Avionics maker
Rockwell Collins (COL) sees an extension of mid-teen year-on-year sales
gains over the next year based on the introduction of the Boeing 787 and
747-8 as well as production rate increases at Airbus, Bombardier and
Gulfstream. The company believes airline profitability will increase and
in turn increase demand for retrofit and spare products.

Industrial filter maker Clarcor (CLC) experienced slowing sales in
Europe and in China during its August quarter. The company expects its
Chinese sales to pick back up and original equipment manufacturers in
the country to begin restocking now depleted inventories.

Architectural glass maker Apogee (APOG) reports weakening in the
domestic commercial market during August and no longer sees its end
markets improving by year end.

More and more in the electronics are in contraction such as
specialty chip maker Intersil (ISIL) which severely cut guidance,
warning of a sequential sales decline of 11% in the third quarter for a
year-on-year decline of 15%. The company reports weak demand across all
of its market along with excess inventory consumption.

Year-on-year sales contraction is in the mid-teens at furniture
maker Virco Manufacturing (VIRC) which warns that most school districts
are facing significant reductions in operating budgets that’s leaving
less money to spend on furniture. Monthly order rates at the company
have been swinging between stable to significantly lower.

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 **

[TOPICS: MDUCG$,MT$$$$,M$U$$$,M$UEQ$,MAUDS$]