Gardner Intelligence Blog

In December, the nominal 10-year Treasury rate was 0.93%, which was the highest the rate had been since February. It was the ninth month in a row and the ninth month ever that the monthly average was below 1%. Although, the rate was more than 1% for most of the early part of January 2021.

The real 10-year Treasury rate, which is the nominal rate minus the rate of inflation, was -0.31%. This was the 12^th consecutive month and 15^th of the last 17 that the real rate was negative. However, the rate was grinding slowly higher since April.  December’s real rate was the highest since December 2019, which was the last time the real 10-year Treasury rate was positive.

November machine tool orders were 1,925 units and $320,026,000.November machine tool unit orders increased 0.3% compared with one year ago, marking the third consecutive month of growth. November was the first quarter of quarter-over-quarter growth since March 2019. As a result, the annual rate of contraction decelerated for the fourth straight month to its slowest rate of contraction since January 2020. 

While unit orders increased compared with one year ago, dollar orders increased at a slightly faster rate of 1.9%. Therefore, the dollar price of machine tools increased by 1.6% compared with one year ago, which was the first increase in price since March 2020. The annual rate of contraction in dollar orders decelerated for the third month in a row. Also, units and dollars both grew in the South Central region.

The past year was truly one without precedent for a whole host of reasons, yet there are plenty of takeaways from 2020’s gyrations that manufacturing leaders can leverage to make the most of 2021.  Those takeaways largely focus around bolstering and improving supply chains.  This will not only allow firms to better reach desired production levels, but also help firms to better manager their upstream costs and in doing so protect profit margins. 

New orders for real durable goods totaled $232,842 million in November. This was 2.8% more than one year ago, making November the first month of growth since February 2020 and just the second since January 2019. There was strong growth in total capital goods, motor vehicles and parts, appliances, computers and electronics, construction machinery, and ships and boats.

The result was that the annual rate of change contracted 8.5%, which was the third consecutive month of decelerating contraction. This was the slowest rate of contraction since April 2020. Consumer durable goods spending is growing extremely fast with month-over-month growth faster than 11% for six months in a row, which is the first time that has happened since 1999. Consumer durable goods spending is confirming a bottom in the rate of contraction in durable goods new orders has occurred. 

Manufacturer’s Close Out Challenging 2020 on High Note

After facing unprecedented and extraordinarily volatile conditions in 2020, the Gardner Business Index (GBI) ended the year on a high note adding almost 2-points in December to close at 53.5.  All six of the components which constitute the Index moved higher in absolute terms during the month.  This meant quickening expansion for production and new orders activity which were already registering expansionary (above ‘50’) readings in November.  For backlog and employment activity, the higher readings resulted in transitions from mildly contracting activity levels (represented by readings slightly below ‘50’) to slightly expanding activity as both crossed above the ‘50’ mark.  Lastly, December’s higher yet still below ‘50’ reading for import orders activity represented a slowing contraction in foreign orders activity.