Gardner Intelligence Blog

November Production at Average Level for 2019

In November, the Index for production of durable goods was 108.5, which was the 15th time in 16 months that index was above 108.0. Compared with one year ago, the index was unchanged after two consecutive months of contraction.

The annual rate of change, which is easier to correlate with other data points, grew 1.1% this month. However, the annual rate of growth decelerated for the ninth-straight month. November’s growth rate was the slowest since July 2017, and it is likely to decelerate even more, as the month-over-month rate of growth has been relatively weak the last six months. Further, the key leading indicator of production – durable goods new orders – is indicating slower growth in industrial production.

Capacity Utilization Hits Fastest Rate Since August

In November, durable goods capacity utilization was 75.6%, which was the fastest rate since August. However, compared with one year ago, capacity utilization contracted 1.8%. While this was the sixth-straight month of contraction, November was the first month with decelerating contraction.

The annual change in durable goods capacity utilization switched from decelerating growth to accelerating contraction as the change fell from 0.2% to -0.2%. November was the first month of annual contraction since July 2017. 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 the first half of 2020.

Real 10-Yr Treasury Rate A Positive Signal for Manufacturing

In November, the nominal 10-year Treasury rate was 1.81%. While this was the highest rate since July, it was also the fourth month in a row the nominal rate was less than 2.00%. At the same time, inflation was at a rate that was keeping the real 10-year Treasury rate near its lowest rate in six years. In November, the real rate was just 0.03%. In four of the last six months, the real rate was less than 0.00%.

In November, the year-over-year change in the real 10-year Treasury rate was -0.63%, which was the 11th consecutive month the change was negative. Also, it the sixth time in seven months that the change was less than -0.60%.

Machine Tool Orders Below 2,000 Units Three of Four Months

October machine tool orders were 1,908 units and $363,800,000.

Unit orders were under 2,000, which is the mark of a healthy machine tool market, for the third time in four months. Orders for the month contracted 25.8% compared with one year ago, marking contraction for the ninth-straight month and 10 of the last 11 months. This was the third-straight month with more than 25% month-over-month contraction. The annual rate of contraction, 12.5%, accelerated for the third month in a row.

If you want to learn what major events will impact the automotive industry in 2020, then listen in on a free webinar on Dec. 17 by Gardner Intelligence's Michael Guckes. The presentation takes a look at what next year may hold in store for automakers and manufacturers. “A Deep Dive of the Automotive Industry: a 2020 Outlook” will be presented by Guckes, Chief Economist and Director of Analytics for Gardner Intelligence. The webinar will be hosted by Gary Vasilash, editor of Automotive Design & Production. “I’ll explain what Gardner Business Index is telling us about the health of the automotive supply chain,” says Guckes. “I’ll also share what the macroeconomic data tell us about the market.” ​​​​​​Guckes has performed economic analysis, modeling and forecasting work for nearly 20 years in a wide range of industries. His column appears in numerous publications each month and is based on monthly data taken from shop owners and managers in the manufacturing sector.

Visit AD&P to register for the webinar.

Reports

Top Shops

‘Top Shops’ is a benchmarking and recognition program designed to help shops build their business.

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.