By Mark Pender

NEW YORK (MNI) – MNI’s U.S. capital goods index remains little
changed near recovery highs, at 72.8 in the Feb. 18 period, to show
steady and strong year-on-year growth in general activity, according to
Market News International’s weekly survey released Tuesday.

Year-on-year sales growth, at 12.8% in the latest period, has been
steady so far this year but is off the fourth quarter’s mid-teens peak.

The outlook for capital goods readings in Thursday’s durable goods
report is uncertain. Shipments in December spiked, as they did in the
prior year, as firms squeezed as much as they could into their 2010
results. This makes for a tough comparison for January.

The January-to-December comparison aside, guidance and trends in
this sample, based on 478 companies in the latest period, point to
steady, low double-digit, quarter-to-quarter growth off an increasingly
ascending year-ago base.

The outlook on the income side is very strong, at a year-on-year
+29%. Yet the cost of rising inputs is an increasing concern for the
sample as is the ability to pass through these costs.

Deliveries and backlog are up at FreightCar America (RAIL) but the
railcar maker reports pricing problems and underutilization of capacity.

Century Aluminum (CENX) warns that aluminum inventories are high
and may build further as restarted capacity comes on line over the next
several months.

Even though funding from the 2005 highway bill continues to be
extended, fabrications maker Valmont Industries (VMI) warns that the
lack of a new long-term federal highway bill is impeding multi-year
highway projects. It warns budget deficits are reducing the ability of
states to match federal outlays.

The absence of a highway bill combined with “the depressed economy”
have reduced sales opportunities for heavy machinery maker Gencor (GENC)
which said the opportunities that do arise are subject to severe
competition and lower margins.

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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