By Mark Pender

NEW YORK (MNI) – MNI’s U.S. capital goods index rose three points
in the Oct. 21 period to 68.6, further above 50 to indicate very strong
growth in year-on-year business conditions, according to the results of
Market News International’s weekly survey released Monday.

The early part of the earnings has been very positive for the
sample, in line with guidance and following a very quiet
pre-announcement period.

Year-on-year sales growth is +8.8%, up four tenths from the prior
week but still trending slower reflected in the 12-week average which is
just barely holding in the double digits. The sample’s currency effect
is in-trend, giving a +4% boost to export sales.

Income is at +8.0% which is right at the 12-week average. Sample
size in the period is 255 companies.

MNI’s sample points to continued strength for capital goods data in
Wednesday’s durable goods report for September. On shipments, even a
flat result for September would lock in the strongest growth of the
recovery for nondefense capital goods, at a quarterly +5.2% and a
year-on-year +9.6%.

Schnitzer (SCHN) believes strong growth rates in developing
economies will sustain long-term steel demand. The steel maker’s top
export destinations are China, Turkey, Malaysia and Egypt.

Furniture maker Flexsteel Industries (FLXS) reports improving order
trends in the commercial office market. The company, citing pent-up
demand, expects to see increased orders for hospitality products over
the next nine month.

Strong demand from increasing build rates for both new and legacy
aircraft programs are giving a lift to the engineered materials unit of
Cytec (CYT). Excluding aerospace, the chemical maker sees slowing ahead
for its industrial markets.

Electrical equipment maker Hubbell (HUBB) doesn’t see any
meaningful improvement for either residential or non-residential
construction until 2013. The company sees slowing growth for its
industrial markets.

Powerwave Technologies (PWAV), which makes wireless infrastructure
equipment, believes uncertainty over the U.S. government’s opposition to
the proposed merger of AT&T and T-Mobile is causing delays in spending
as the two companies re-evaluate their capital plans.

Ultratech (UTEK), out of the hard hit electronics machinery group,
said customers are reassessing their capital expansion plans which is
translating into a more conservative outlook.

Citing its own data, chip-tool maker Cohu (COHU) warns that chip
test equipment utilization has fallen to its lowest level since late
2009. The company is cautious, forecasting steepening rates of
sequential and year-on-year 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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