While June’s rate of contraction was still a fast rate of month-over-month contraction, it was a slower rate of contraction than the previous two months.
The month-over-month rate of contraction in machine tool unit and dollar orders slowed sharply in June. The annual rate of contraction may be near or at a bottom.
New orders for real durable goods totaled $225,331 million in June. This was more 25-40% more than April and May when many states closed their economy.
The month-over-month rate of growth for durable goods spending was 11.7%, which was the fastest rate of growth since July 2005.
In June, real disposable income was $16,028 billion, which was 8.1% more than one year ago. The extreme month-over-month rate of growth in disposable income is a direct result of government payments to individuals.
The Gardner Business Index reported its third month of slowing contraction in July.
Permits filed in June were up 11.7% compared with one year ago, returning to double-digit growth after two months of contraction.
Compared with one year ago, capacity utilization contracted 15.1%, which was the second straight month that the month-over-month rate of change contracted at a slower rate.
In June, the index for production of durable goods was 95.2. The index increased for the second month in a row after reaching the second-lowest level for the index since January 2010.
The pandemic accelerated the contraction in metalworking and extended the accelerating contraction in cutting tool orders. But, the GBI: Metalworking indicates the lows in cutting tool orders may be in the past.
Gardner Business Index data collected during June 2020 reported that new orders activity in the moldmaking and mold industry was already experiencing an initial rebound just months after COVID forced the shutdown of much of the U.S. and global economy.
A falling change in the real 10-year Treasury rate tends to be a positive signal for durable goods manufacturing.
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