Gardner Intelligence Blog

Housing Permits Contract More Than 15% for Second Month

Housing Permits Contract More Than 15% for Second Month

There were 105,100 housing permits filed in May 2020, climbing above 100,000 permits after one month under that level in April. Permits filed in May were down 15.4% compared with one year ago, which was the second month in a row with contraction more than 15%. In May, the annual rate of growth decelerated to 4.4%, which made it the ninth-straight month of growth but the second month of decelerating growth.  

The real 10-year Treasury rate, which is the nominal rate minus the rate of inflation, was -0.98%. This was the fifth consecutive month and eight of the last 10 that the real rate was negative. The real rate would have been even lower except the inflation rate has fallen significantly. In May, the annual rate of inflation was just 0.12%, which was the lowest rate since September 2015. In May, the year-over-year change in the real rate was -121 basis points. The change was negative for the 17th month in a row.

Gardner Intelligence Offers Its Electronics End-Market Webinar Free Online

If you were unable to attend Gardner Intelligence’s webinar discussing the Electronics market including a 2020/2021 forecast you can still watch it using the link below.

As always, the Intelligence team used its ‘3-lenses’ approach to make sense of what is happening in the electronics industry.  By layering the insights from our proprietary Gardner Business Index data, financial data with public-company forecasts from Wall Street analysts and macroeconomic data we can evaluate and share the story as told by the data.  We look at where the data agree and disagree and use that to build the best possible framework for understanding this and other critical end-markets serviced by the manufacturing sector.

Capacity Utilization: All End Markets Contracting Faster

Capacity Utilization: All End Markets Contracting Faster

In May, durable goods capacity utilization was 57.1%, which was a modest improvement over April. Compared with one year ago, capacity utilization contracted 24.4%, which was the third fastest rate of month-over-month contraction ever. This was the 12th month in a row and the 13th of the last 14 months that capacity utilization contracted. 

The annual change in durable goods capacity utilization contracted at an accelerating rate for the seventh month in a row, falling to -6.5% from -4.5%. May was the fastest rate of annual contraction since April 2010. As the annual rate of change tends to lead capital equipment consumption by seven-to-10 months, capacity utilization is signaling accelerating contraction in capital equipment spending through at least into the third quarter of 2020 and likely through the remainder of the year.

Durable Goods Production Contracts More Than 23% for Second Month

In May, the index for production of durable goods was 83.1, which was the second lowest level for the index since January 2010. Compared with one year ago, the index contracted 23.4%, which was the second month in a row that the one-month rate contracted faster than 23%.

The annual rate of change, which is easier to correlate with other data points, contracted 5.02% this month. This was the third consecutive month of accelerating contraction. The key leading indicator of production—durable goods new orders—is indicating further contraction in production.

To learn about the latest manufacturing trends in the electronics market? Join Michael Guckes (Chief Economist and Director of Analytics) along with Jim Callari (Editorial Director) of Plastics Technology Magazine at 2pm today for an informative discussion.  This is a FREE session and only requires your registering.


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World Machine Tool Survey

An independent annual survey that collects statistics from machine tool consuming and producing countries and compares them in real U.S. dollars.

Capital Spending Survey

An annual survey that collects statistics regarding budgeted spending on machine tools, testing equipment, software and more.

Gardner Business Index

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