Durable Goods Growth Hits 3.2 Percent

The change in the 10-year Treasury rate rose late in 2018, putting downward pressure on the rate of growth in consumer durable goods spending.

In December, the month-over-month rate of growth for durable goods spending was 3.2 percent, which was the fourth month in a row that the growth rate was below the historic average of 5.5 percent. December’s rate of growth was the slowest since January 2014. The annual rate rate of growth was 5.7 percent, decelerating for the fourth straight month. This was the slowest rate of annual growth since February 2017. 

The change in the 10-year Treasury rate rose in the second half of 2018, which put downward pressure on the rate of growth in consumer durable goods spending as most durable goods are bought with credit. However, in the last couple of months, the change in the 10-year Treasury rate has dropped into negative territory again. If this trend continues, then it will be a positive for durable goods spending.

Below are key spending categories that lead the most important manufacturing new orders and production indices.

Accelerating Growth: medical care, other non-durable goods

Decelerating Growth: air transportation services, appliances, clothing/footwear, durable goods, electronics, food/beverage, motor vehicles/parts, total consumer

Accelerating Contraction: pleasure boats

Reports

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World Machine Tool Survey

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Capital Spending Survey

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Gardner Business Index

A diffusion index measuring month-to-month changes in activity at durable goods and discrete parts manufacturing facilities.