Recent months of vehicle sales have been suppressed by limited production resulting from supply chain disruptions. Despite repressed sales volumes due to limited supply, it is clear that demand for vehicles is red-hot when one examines pricing and loan data.
While the durable goods production index had an easy comparison in March 2021 with March 2020, the index did increase to its second-highest level since November 2019. Leading indicators such as durable goods new orders and consumer durables goods spending are pointing to faster growth in production in the months ahead.
Having surpassed the 1-year mark since COVID-19 forced the shutdown of much of the global economy, expect to see a swelling number of articles report drastic growth in virtually everything. This will require business leaders and forward-looking decision makers to take additional precautions when using new data releases over the coming months and longer.
Compared with one year ago, capacity utilization grew at its fastest rate in March 2021 since March 2011. This was partly due to an easy comparison with March 2020, comparisons that will get even easier in April and May. The fast growth in capacity utilization was also due to strong manufacturing activity as the Gardner Business Index showed.
The inflation rate reached 2.62% in March. Even though the nominal 10-year Treasury rate rose for the eighth month in a row, this significantly higher rate of inflation since the real 10-year Treasury down to -1.01%, which was the lowest real rate since November 2011.
Many firms are looking to get back to business with many hopeful that COVID will be a rear-mirror issue in the near future.
The Gardner Business Index (GBI) -just like the Purchasing Manager Indices compiled around the world- is calculated as a diffusion index. A diffusion index is at its core a weighted average meaning that it behaves differently from the majority of charts used in the business world. Understanding how the results are calculated will help you to both understand what a particular value is indicating along with how to properly compare readings over time.
February machine tool unit orders were the highest since February 2013. Order growth is booming as the GBI: Metalworking is hitting all-time highs as a result of strong growth in new orders and production at machine shops.
Durable goods new orders continued their run of growth as aerospace new orders grew 31% from one year ago, which was their first month of growth since July 2019.
The 2020 World Machine Tool Survey details the machine tool production, imports, exports, and consumption of 62 countries. Also, highlighted are trends in key leading indicators, such as money supply, industrial production, and capacity utilization. And, the top five imported and exported machine tool types with their percent change from the previous year for each country are also detailed.
Government stimulated consumption over the last year coupled with unprecedented restrictions on global production has driven the intersection of supply and demand into unprecedented territory. Price shocks as reported by manufacturers are being felt both upstream and downstream; it may only be a matter of time before these shocks are more directly felt at the consumer level.
Compared with one year ago, February’s monetary base was up 57.7%, which was the sixth month in a row and eighth in the last 10 months with faster than 50% growth.
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