Gardner Intelligence Blog

Cutting Tool Orders Possibly Turning Up

In December 2019, real cutting tool orders were $188.0 million,  the lowest level for cutting tool orders since December 2017. Compared with one year ago, cutting tool orders contracted -2.6%, which marked the 10th consecutive month of month-over-month contraction. However, this was the slowest rate of month-over-month contraction since April 2019. The annual rate of change contracted at an accelerating rate for the third month. 

The GBI: Metalworking is a good leading indicator of cutting tool orders and leads cutting tool orders by seven-to-10 months. The annual rate of change in the Index has contracted for 11 straight months, clearly indicating that the annual rate of contraction in cutting tool orders will continue to accelerate. However, the GBI rate of change does appear to be in the initial stages of a turn. If it bottoms in the first quarter of 2020, then it would be expected that the rate of change in cutting tool orders would bottom around the summer of 2020.

Housing Permits Grow at Fastest Rate Since November 2015

There were 113,000 housing permits filed in January 2020. This was the highest level for housing permits since October 2019. Permits filed in January were up 19.7% compared with one year ago, which was the fastest rate of growth month-over-month since November 2015. January was the seventh consecutive month of growth in housing permits. Also, this was the fourth month in the last five that housing permits increased more than 12%.

In January, the annual rate of growth accelerated to 4.7%, which made it the fifth-straight month of accelerating growth. This was the fastest rate of annual growth since September 2018. The annual rate of growth will likely continue to accelerate in the months ahead, as the three-month rate of change was faster than 12% for the fourth month in a row.

The Coronavirus, also known as COVID-19 may have a significant impact on the global supply chain serving the Moldmaking industry. In order to help the industry monitor the impact of the virus, Gardner Intelligence will be tracking and reporting on supplier delivery, material price and export order activity on a monthly basis throughout at least the first quarter of 2020. Gardner Intelligence is one of the few places able to provide detailed and specific data on the Moldmaking industry on a monthly basis.

 

Change in 10-Yr Rate Negative for 13th Month

In January, the nominal 10-year Treasury rate was 1.76%, which was down slightly from the previous two months. Also, this was the sixth month in a row the nominal rate was less than 2.00%. At the same time, inflation reached its highest annual rate since October 2018 and kept the real 10-year Treasury below zero for the fifth time in eight months. In January, the real rate was just -0.13%.

In January, the year-over-year change in the real 10-year Treasury rate was -0.44%, which was the 13th consecutive month the change was negative. 

Monetary Base Grows Faster for Second Month

In January, the monetary base was $3.443 trillion, which was its highest level since November 2018. This was the second month in a row of month-over-month accelerating growth, which is a positive sign for capital equipment consumption.

The annual rate of contraction in the money supply, -8.1%, decelerated for third month in a row, which also is positive sign for capital equipment consumption. This was the slowest rate of annual contraction since February 2019. A decelerating contraction in the annual rate of change in the money supply tends to lead to a decelerating contraction in capital equipment spending.

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.