Gardner Intelligence Blog

Commercial and Industrial Loans Up 20-Percent While Rates Fall Below Pre-Pandemic Levels

In the 3-month period beginning with late February 2020, total Commercial and Industrial (C&I) loans swelled by 25-percent from $2.4 Trillion to over $3.0 Trillion.  The surge in demand resulted in a shock to interest rates which moved quickly higher.  The U.S. Corporate BBB Effective Yield surged during one 3-week period in March from 2.6% to briefly over 5.5%.  Following this initial surge in capital demand, bond rates began falling significantly faster than debt levels.

As of the most recent August releases, the BBB rate had fallen 20 basis points below its pre COVID-19 level while loan demand remains 20% above at $2.8T.  That the combination of a 25-percent increase in loan demand was met with only a brief spike in rates followed by rates that are now below pre-pandemic levels illustrates the robustness of credit markets in the current recession.  By comparison, yields exceeded 10-percent at their peak during the Great Recession and remained strongly elevated for roughly 12-months.

July 2020 Durable Goods New Orders Increase for Third Consecutive Month

Over the last few weeks, several measures of durable goods have improved markedly.  After contracting by nearly 18% in March on a month-to-month basis, the May through July period has averaged 11.22% growth. The July reading released today (8/26) was 11.19%

This turning of events supports the outlook expressed by many that the present economic recession will end by year-end 2020, or in the first-half of 2021.

Housing Permits Highest in More Than a Decade

Housing Permits Highest in More Than a Decade

There were 135,400 housing permits filed in July 2020. This was the highest level of permits since June 2007 and the third-highest since September 2006. COVID-19 and work-from-home policies have created demand for new homes in the suburbs at the highest rate since the housing bubble burst and the Great Recession followed.

Permits filed in July were up 14.0% compared with one year ago, returning to double-digit growth for the second month in a row.  Housing permits grew for the 11th time in 13 months, with the only two months of contraction the first two months of the pandemic hitting the U.S. In July, the annual rate of growth accelerated to 7.0%, which made it the 11th-straight month of growth. It was the second-fastest rate of annual growth since May 2018.

E-Commerce Sales Up 10.5 Percent In One Quarter

On August 18th, the Census Bureau released its second quarter reading of U.S. e-commerce sales.  In the latest quarter the reading was $681.8B; up 10.5-percent from the prior quarter and 23.7-percent from the same quarter one-year ago.  

COVID’s acceleration of the movement toward online purchases will also speed the evolution of the supply chain of the future.  The way in which goods arrive at their destination location will require new sorting and transportation equipment from advanced robots, conveyors and sensors to electric delivery trucks and even drones. 

Beware of COVID's Misleading Impact on Diffusion Indices

Gardner Intelligence collects business activity data across many different segments of the manufacturing sector.  These segments align with Gardner’s print magazine publications including Modern Machine Shop (Metalworking), Production Machining (Precision Machining), Products Finishing (Finishing), MoldMaking Technology (Moldmaking/Molding), Plastics Technology (Plastics and Plastics Processing) and Composites World (Composites Fabrication).  Each of these segments has its own business index thanks to Gardner’s broad and deep connections to over 200,000 U.S. manufacturers.  The entirety of the survey responses collected monthly from all of these manufacturers are used to produce what is simply called the “Gardner Business Index” and published on our website: www.gardnerintelligence.com/blog.

For each of these manufacturing segments, Gardner Intelligence also calculates independent business activity indices.  This enables our readers to see how their specific segment of the manufacturing industry is being affected by the many common factors that impact all of manufacturing as well as those unique economic factors that exclusively shape their business environment. 

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.