Gardner Intelligence Blog

Gardner Intelligence sat down with Christina Fuges, Editorial Director of Moldmaking Technologies Magazine to talk about the June 2020 Moldmaking Business Index data.   Just months after COVID forced the shutdown of many segments of the U.S. and global economies, the moldmaking and molding industries were already reporting by June that they were seeing initial signs of a rebound in new orders.

In June, the nominal 10-year Treasury rate was 0.73%, which was the fourth month in a row and the fourth month ever that the monthly average was below 1%. So, the nominal 10-year Treasury rate has hovered near its all-time lows for four straight months.

The real 10-year Treasury rate, which is the nominal rate minus the rate of inflation, was -0.84%. This was the sixth consecutive month and ninth of the last 11 that the real rate was negative. Inflation was relatively low from April to June compared with the previous four years. However, inflation did pick up significantly in June.

May machine tool orders were 1,507 units and $212,664,000.

May’s unit orders improve slightly from April’s lowest monthly total since May 2010. Orders for the month contracted 26.6% compared with a year ago, which was the eighth time in 10 months that unit orders contracted more than 20%. Also, this was the 11^th month in a row of contraction. The annual rate of contraction accelerated for the fifth month in a row to -20.4%. This was the fastest rate of annual contraction since May 2010.

In June, the monetary base was $5.002 trillion, which was slightly lower than last month. However, compared with one year ago, June’s monetary base was up 52.7%. Therefore, the one-month rate of change was more than 50% for the second month in a row. (In 2009, the monetary base increased more than 100% five times in the first eight months of the year.) This was the seventh month in a row of month-over-month growth. The annual rate of growth accelerated to 10.9% in June, which was the second straight month of accelerating growth.

Historically, the annual rate of change in the monetary base leads capital equipment consumption, specifically machine tool orders, by 12-18 months. Although, the lead time between the monetary base and capital equipment consumption shrunk over the last decade. 

New orders for real durable goods totaled $186,870 million in May. This was the second lowest total since July 2009 and was down 22.3% from one year ago. May was the second fastest rate of month-over-month contraction since June 2009, and May was the third consecutive month of faster than 17% contraction.  

The result was that the annual rate of change contracted 9.1%, which was the fastest rate of annual contraction since April 2010. The sharp deceleration in growth in consumer durable goods spending in March through May means that durable goods new orders will continue to contract faster.