Gardner Intelligence Blog

Do you manufacture aerospace parts? Are you invested in aerospace companies? Or are you just looking to branch out into other areas of manufacturing. Gardner Intelligence’s Chief Economist and Director of Analytics Michael Guckes will be co-hosting a webinar on the aerospace industry with Composites World’s Scott Francis this month. Join them as they share their unique insights on the current and near-term climate of the aerospace industry. This free webinar will be held Wednesday, September 11th, 2019, at 2 p.m. EDT. 

To attend register here

The Gardner Business Index (GBI) experienced a modest rebound in August, registering 49.0. This comes after the July reading, which marked the Index’s first contractionary reading in over two years. The Index has fallen 15.3% from the same month one year ago. Index readings above 50 indicate expanding activity, while values below 50 indicate contracting activity. The further away a reading is from 50, the greater the magnitude of activity change. Gardner Intelligence’s review of the underlying data for the month observed that the Index – calculated as an average of its components – was supported by supplier deliveries and production, as well as a ‘no change’ reading in new orders. Pushing down the Index for August were employment, exports and backlogs, all of which reported contracting results.

Gardner Intelligence was particularly encouraged by the rebounding readings in new orders and production after both measures reported contracting values during the prior month.  New orders and production are typically leading measures of the overall Index.  Often these two measures foreshadow directional changes in backlogs, supplier deliveries and employment.

Durable Goods Spending Hits Fastest Growth Since August 2018

In July, the month-over-month rate of growth for durable goods spending was 5.7%, which was the fastest rate of growth and the first month with growth above the historic average rate since August 2018. Additionally, it was the fifth month in a row with growth faster than 4.0%. The moderate boost in the rate of growth was likely the result of the falling change in the real 10-year Treasury rate. Because the 10-year rate itself has dropped so low, durable goods spending is making up its largest share of all consumer spending ever. 

As a result, the annual rate of growth held steady at 4.4%. This was the slowest annual rate of growth since April 2012, but if the 10-year Treasury rate remains low, there could be some modest acceleration in the annual rate of growth heading into the fourth quarter.

Income Growth Slows in July

In July 2019, real disposable income was $15,019 billion, which was its highest level ever and only its second month ever above $15,000 billion. However, the month-over-month rate of growth was 3.0%, which was the slowest rate of growth since April 2017 and the first month below the historic average rate of growth since July 2017. In 2019, the month-over-month rate of growth has been notably slower than it was in 2018.

The annual rate of growth remained unchanged at 3.6%, keeping it at its slowest rate of growth since May 2018. Also, it was down from its peak rate of growth of 4.0% in December 2018. With noticeably slower month-over-month growth since the beginning of the year , it is likely that the annual rate of growth in disposable income will decelerate more in the months ahead.

Housing Permits Grow for First Time in 2019

There were 118,800 housing permits filed in July 2019. This was the fifth consecutive month with more than 105,000 permits filed, and it was the second-most housing permits filed since June 2018. Additionally, the month-over-month change in permits increased for the first time since December 2018, growing 5.1% compared with one year ago.

The annual rate of change contracted at an accelerating rate for the third month in a row, slowing to 1.8%. That’s the fastest rate of contraction in housing permits since September 2011, and it is likely to change in the next couple of months if the month-over-month rate of change continues to grow.

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.