The profitability of most manufacturing companies is highly correlated with capacity utilization. Factories that sit idle destroy profits. The industries with the lowest capacity utilization was autos and parts at 53.0%, down from 57.1% in November and 67.4% in July. Clearly this is not good for General Motors Corporation (GM) or its suppliers like TRW Automotive Holdings Corporation (TRW), but you already knew they were not doing well.

The other industry with an extremely low level of capacity utilization was wood products, where utilization fell to 54.5% from 57.4% in November and 65.3% in July. Given this, I would not expect good news from firms like Weyerhaeuser Company (WY) or Universal Forest Products, Inc. (UFPI) when they report their quarterly earnings. Then again that is true for most companies involved in manufacturing.

The one industry that bucked the trend was aerospace, where capacity utilization rose to 76.3% from 69.7% in November. That however was due to the ending of the strike at The Boeing Company (BA).