The capital goods industry is comprised of companies that produce goods that are used to produce other goods or services. For example, a company that manufactures machines used to assemble vehicles would be classified as a capital goods company. The industry includes a wide variety of companies of different sizes, many of which are in the manufacturing sector.
There are pros and cons to working in any industry, and individual preferences, skills, and abilities vary significantly. However, if you possess several of the following characteristics, you might enjoy a career in the capital goods industry:
Capital goods are physical assets that are not purchased directly by consumers. This broad definition includes many thousands of different items, ranging from a $5 hammer to a $50 million warehouse. If an item is purchased by a consumer, it is not defined as a capital good. If that same item is purchased by a company for the purpose of producing other goods and services, it is defined as a capital good. For example, a car purchased by an individual for personal use is a consumer good. But, a car purchased by a company for business deliveries is a capital good.
Categories of capital goods include:
Many people have never heard the term “capital goods,” but they’ll likely recognize the names of some of the largest capital goods companies in the United States:
According to classical economic theory, there are three factors of production: labor, capital, and natural resources. Capital goods constitute the tangible part of capital. (There’s some theoretical debate over whether intangible goods or services, like software, count as capital goods, but we’ll leave that conversation for another day.)
Because of their fundamental role in production, capital goods are used as a leading indicator of the health of the U.S. economy. If companies are buying more of the goods they need to make other goods, that is viewed as a positive signal, and vice versa.
Companies in the U.S. have produced between roughly $50 and $70 billion of capital goods each month over the past two decades. (This does not include capital goods related to defense or aircraft.)
Data on manufacturers' new orders for capital goods from Federal Reserve Economic Data (FRED) shows that numbers have been increasing steadily since April of 2020, which indicates that demand for capital goods is growing at a time when some other industries are struggling due to inflation and other macroeconomic factors. New orders for June 2022 (the most recent month with available data) were about $74 billion, the highest level of all time.
Current trends suggest that the capital goods industry may continue to grow, even as it faces various challenges related to the ongoing pandemic and an increasing preference for remote work. Not all manufacturing jobs fall under the category of capital goods, but there’s significant overlap between the two categories. Since the Bureau of Labor Statistics doesn’t report on capital goods as a category, Deloitte’s “2022 manufacturing industry outlook” provides an approximation for helpful analysis in this area:
“As industrial production and capacity utilization surpassed pre-pandemic levels midyear, strong increases in new orders for all major sub-sectors signal growth continuing in 2022.”
Of course, no one has a crystal ball, but the capital goods industry seems to be stable and growing based on its current trajectory.
Capital goods is an enormous industry spanning virtually all sectors of the economy. It includes companies of a variety of sizes who employ people with thousands of different job titles. This means that there’s a high likelihood you could find a suitable career path for yourself somewhere in the capital goods industry.
Here are a dozen roles you’ll commonly find at capital goods companies:
>> Read More: Best paying jobs in capital goods
Due to the wide variety of companies in the capital goods industry, the pros and cons largely depend on the company you work for. However, here are some reasons you might enjoy working for a company that produces capital goods.
If you’re looking for job security and earning potential during these difficult and uncertain times, consider exploring a career in capital goods. The industry is growing steadily, and there are many different ways to get in depending on your skills and interests.
If you’re already in a career path you enjoy, you can start looking for your desired job titles on the job boards of capital goods companies of interest.
If you’re looking for some direction on where to take your career next, read “What Job Is Right For Me?” and use Teal’s free Work Styles assessment to gain some clarity on how you work best and get a sense of the roles that might be a good fit.
Capital goods are goods that are used by companies to produce other goods or services while consumer goods are purchased directly by consumers.
No. Some jobs in capital goods involve manual labor (like working on an assembly line), but others do not (like working in sales).
This depends on several factors including your geographic area and the types of role you’re looking for. However, the capital goods industry has many entry-level openings.