Gardner Intelligence Blog

Durable Goods Production Highest Since Start of Pandemic

Durable Goods Production Highest Since Start of Pandemic

In October, the index for production of durable goods was 103.6. Compared with one year ago, the index contracted 4.2%, which was the sixth consecutive month of decelerating contraction. This was the slowest rate of contraction since March. 

The annual rate of change, which is easier to correlate with other data points, contracted 8.6% this month. This was the eighth consecutive month of accelerating contraction. The key leading indicator of production—durable goods new orders—appears to have bottomed out, according to its rate of change, and indicating that production should do the same soon. Also, consumer durable goods spending, which leads durable goods new orders, reached an all-time high for four months in a row, growing at an accelerating each of those four months.

Change in Real 10-Yr Treasury Highest Since January

Change in Real 10-Yr Treasury Highest Since January

In October, the nominal 10-year Treasury rate was 0.79%, which was the highest the rate had been since March. However, this is still very near the lowest rate ever. It was the eighth month in a row and the eighth month ever that the monthly average was below 1%.

The real 10-year Treasury rate, which is the nominal rate minus the rate of inflation, was -0.60%. This was the 10th consecutive month and 13th of the last 15 that the real rate was negative. However, the rate was grinding slowly higher since April.  

October Data Signals Business Activity Expansion Strengthening

An examination of October’s data by end-market indicated a significant acceleration in electronics manufacturing which expanded faster than any other major end-market monitored.  It was followed by expanding activity in the forming and fabricating, custom processors and automotive industries.  Another important development reported by the end-market data was the transition of the Metalworking Job Shops market into expansionary territory for the first time under COVID’s shadow.  Only the aerospace, industrial motors and construction machinery markets reported accelerating contractionary activity in October.

Gardner Intelligence does its utmost to provide regular and informative updates on the state of manufacturing considering the challenges posed by COVID-19.  Gardner cannot thank our survey participants enough for their insights and ongoing support.  We hope that you will continue to tell us how your businesses are faring.  Only through your participation are we able to assess the current industry and see where it is heading.  We would encourage our followers and publication subscribers to regularly visit our website blog and connect with Gardner Intelligence on LinkedIn and see our YouTube Channel.

As manufacturers enter the fourth quarter of one of the most unique years ever, the Gardner Business Index (GBI) is one of the best resources available to help manufacturing leaders know how to prepare for the future. In the last few months, the Index has captured the early expansion of business conditions, especially the rebound in domestic new orders activity which has been closely shadowed by expanding production. Of all the factors in play, continued activity gains will be subject to supply chain constraints, especially as transportation services begin dealing with the seasonal rush of year-end purchases.

Machine Tool Orders Increase in September

Machine Tool Orders Increase in September

September machine tool orders were 2,311 units and $358,767,000.

Machine tool orders of more than 2,000 units are typically a sign of a strong machine tool market. And, orders were more than 2,000 units for the second time in four months. September’s unit orders increased 4.6% compared with one year ago, which was the first month of month-over-month growth since June 2019. As a result, the annual rate of contraction decelerated for the second straight month. 

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.