By Mark Pender

NEW YORK (MNI) – MNI’s U.S. capital goods index rose more than
three points to a recovery best 75.4 in the March 18 period, above 50 to
indicate year-on-year growth and above the top end of trend to indicate
accelerating growth, according to the results of Market News
International’s weekly survey released Monday.

The pass-through of high input costs is, based on commentary,
giving only a small but increasing boost to sales,, which are a
year-on-year +14.9%. The four-week average of +13.9% is the highest this
year.

Currency effects on export sales are still slightly negative though
more companies are reporting a small positive effect.

Income is strong at +29%. Sample size in the period is 281
companies.

Year-on-year, MNI’s data point to low double-digit growth for
first-quarter nondefense capital goods shipments in what would be modest
acceleration vs. the Commerce Department’s fourth-quarter rate of +9.1%.

Quarter-to-quarter, MNI’s data point to low single-digit growth vs.
Commerce’s fourth-quarter sequential rate of +0.9%.

Month to month, this sample points to gains for capital goods
readings in Thursday’s durable goods report for February. In January,
non-defense capital goods shipments fell 2.8% against a very tough
December comparison.

Early warnings on the negative impact of the Japanese crisis have
been limited so far to only several companies in the sample. Several
others are saying troubles will be limited.

High input costs are a central topic for the sample. Industrial
filter maker Clarcor (CLC) said increased commodity prices did not
significantly impact its margins during its February quarter. The
company bases customer quotations on existing material prices, allowing
it to pass through costs.

Manitex International (MNTX), which makes cranes & forklifts, hopes
input inflation will be absorbed through increasingly rising volumes.

Profitability at Nucor (NUE) has improved each month of the first
quarter as utilization rates increase and as output prices catch up with
input costs. Citing customer restocking, the steel maker expects this
trend to extend to the second quarter. The company warns that its
residential and non-residential construction markets remain challenging.

Trinity (TRN) is the latest to report new orders out of the rail
sector. The company’s railcar unit, which had been suffering, announced
a five-year deal for both tank and freight cars.

Rates of growth are slowing for diversified industrial manufacturer
Emerson (EMR), which reports a three-point dip in February for trailing
three-month orders. The company warns that orders will continue to
moderate as comparisons toughen.

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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