By Mark Pender

NEW YORK (MNI) – MNI’s U.S. capital goods index slipped about a
point-and-a-half in the Nov. 26 period to 67.8, indicating strong
on-year growth and still pointing to moderate quarter-to-quarter growth,
according to Market News International’s weekly survey.

Third-quarter nondefense capital-goods shipments rose a
quarter-to-quarter 3.9%, up from 3.2% growth in the second quarter for
the fastest pace since second-quarter 2007. The third-quarter’s on-year
pace of +10.3% was exceptionally strong.

On-year readings in this sample, which have slowed for four weeks
in a row, now show slightly slower growth than the third quarter’s
on-year pace, yet sequential growth should keep going given the
comparatively high base of fourth-quarter 2009.

Last week’s capital-goods data in the durable goods report showed
sizable weakness in shipments and new orders for October but not
weakness for unfilled orders which rose 1.2% for nondefense capital
goods following a 1.8% jump in September.

Companies in this sample are relying on unfilled orders to meet
what is strong fourth-quarter sales guidance.

On-year sales for the 275-company sample are +13.2% for the slowest
reading in two months. Income is steady and strong at an on-year +21%.

On-year sales growth at Amtech Systems (ASYS) was 288% in the third
quarter vs. 245% in the second, rates similar to other chip machinery
makers. Citing its order pipeline, Amtech sees high volume shipments
extending through the ongoing quarter.

In contrast, chip tool maker LTX Credence (LTXC) cut guidance
warning that business has slowed due in part to capacity absorption. The
company sees a sudden and steep sequential sales decline of 25% for its
January quarter.

Strong farm income, the result of strong commodity prices, is a key
expectation for the capital-goods sector. Raven Industries (RAVN) sees
continued growth for its global positioning unit.

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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