Gardner Intelligence Blog

In January, real personal income was $21,453,852 (millions of USD, SAAR). This was almost an all-time high and only eclipsed by April 2020. In spite of, or because of, the economic lockdowns, real personal income shot up dramatically from its 60-year up trend in April 2020. By November 2020, real personal income had returned to its multi-decade up trend. January 2021 resulted in a similar but smaller spike as April 2020.

Gardner Intelligence: Business Index 57.1

Business activity levels as recorded by the Gardner Business Index (GBI) expanded during February thanks to further activity gains in new orders, backlogs, and employment.  Excluding export activity, all index components reported rising levels of business activity over the prior month.  New orders and backlog readings for the month rose to levels last reported in mid-2018 and February’s employment activity matched readings last reported in mid-2019.  The encouragement created by these gains however was tarnished by a 6-point rise in the supplier delivery reading.  Rising delivery readings indicate that order-to-fulfillment times are lengthening and that manufacturers in general are struggling to obtain the upstream goods necessary to complete their orders.  Removing the inflationary impact of the supplier delivery reading from the overall Index would have resulted in a March reading of 54.1, placing this series at its own 2½ year high.

In January, durable goods capacity utilization was 73.7%, which was the highest rate of capacity utilization since February 2020. The capacity utilization rate has increased every month since April 2020. Compared with one year ago, capacity utilization contracted 1.4%, which was the slowest rate of contraction since August 2019. 

The annual change in durable goods capacity utilization contracted at a decelerating rate for the first time this cycle, ending a string of 14 months of accelerating contraction. It seems clear that the annual rate of change has bottomed out. As the annual rate of change tends to lead capital equipment consumption by seven to 10 months, capacity utilization is signaling a bottom in the annual rate of change in capital equipment about the second quarter of 2021.

In December 2020, real cutting tool orders were $157.3 million, contracting 17.1% from December 2019. However, this was the slowest rate of contraction since March 2020. December was the 22^nd consecutive month of month-over-month contraction, but these same figures clearly show that the contraction is slowing.

The annual rate of change contracted at an accelerating rate for the 15^th month. The annual rate of contraction was 22.6%, which was the fastest rate of annual contraction since the data was made public. The annual rate of contraction will likely accelerate a little through the March data release. Near the end of the first quarter, the annual rate of contraction should begin decelerating.

In January, the index for production of durable goods was 103.7. Compared with one year ago, the index contracted 1.1%, which was the slowest rate of contraction since February 2020. The month-over-month rate of contraction has decelerated virtually every month since the economic lockdowns started in 2020, meaning manufacturing production has increased since April.

The annual rate of change, which is easier to correlate with other data points, contracted 9.0% this month. This was the 11^th consecutive month of accelerating contraction. The key leading indicator of production – durable goods new orders – has bottomed out, according to its rate of change, and is indicating that production should do the same soon. Also, consumer durable goods spending, which leads durable goods new orders, grew more than 11% from June to November and 9.5% in December. This seemingly means production needs to increase significantly to keep from eating too far into inventories.