In May, the nominal 10-year Treasury rate was 0.67%, which was the third month in a row and the third month ever that the monthly average was below 1%. Also, this month’s rate was just 0.01 basis points more than last month.
While machine tool orders continue to contract at an accelerating rate, several of the early leading indicators of machine tool orders have trended in a positive direction for a number of months.
The recent rapidly accelerating growth in the monetary base should eventually lead to accelerating growth in machine tool orders and capital equipment in general. Based on the historical relationship, machine tool orders should bottom sometime between September 2020 and February 2021.
Latest reading implies that overall manufacturing business conditions worsened further in May, but at a much slower rate than experienced in April.
New orders for real durable goods totaled $167,643 million in April. This was the lowest total since July 2009 and was down 30.7% from one year ago.
In April, real consumer durable goods spending dropped to its lowest level since September 2014.
April was the highest level of real disposable income by $1.8 trillion, or roughly 12% more than the previous all-time high.
There were 96,900 housing permits filed in April 2020. Permits filed in April were down 18.4% compared with one year ago, which was the first month of contraction since June 2019.
Due to the effects of the coronavirus, the GBI annual rate of contraction accelerated since March. A bottom in the annual contraction of cutting tool orders cannot be expected until seven to 10 months after a bottom in the GBI annual rate of change.
In April, durable goods capacity utilization was 55.3%, which was the lowest rate ever. Compared with one year ago, capacity utilization contracted 26.6%, which was the fastest rate of month-over-month contraction ever.
The durable goods production index fell to 79.9, contracting 26.4% month-over-month. That was the fastest rate of month-over-month contraction in the index since its inception.
Automotive production at the end of March had fallen by one-third according to several measures. This decline was outpaced by a near 50% reduction in demand as measured by unit sales. April’s data reported a near complete shutdown of vehicle production across the country.
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