Gardner Intelligence Blog

Housing Permits Grow Almost 10% in March

There were 116,000 housing permits filed in March 2020. Permits filed in March were up 9.7% compared with one year ago, which was the ninth consecutive month of growth in housing permits.

In March, the annual rate of growth accelerated to 7.4%, which made it the seventh-straight month of accelerating growth. This was the fastest rate of annual growth since May 2018. Because of the strong monthly growth rate since September 2019, the annual rate of growth may continue to accelerate for another month or two before it is significantly affected by COVID-19. 

In February 2020, real cutting tool orders were $188.2 million,  which was the third time in four months that orders were below $190 million. Compared with one year ago, cutting tool orders contracted -9.5%, which marked the 12th consecutive month of month-over-month contraction. The annual rate of change contracted at an accelerating rate for the fifth month. The annual rate of contraction was 6.3%, which was the fastest rate of contraction since November 2016.

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 13 straight months, clearly indicating that the annual rate of contraction in cutting tool orders will continue to accelerate. Due to the effects of the coronavirus, the GBI annual rate of contraction accelerated once again in March. A bottom in the annual contraction of cutting tool orders cannot be expected until seven to 10 months after a bottom in the GBI annual rate of change.

For each of those questions, respondents were asked to compare the current state of their business to the norm prior to COVID-19 and rank the severity of the change or adjustment from minimal to moderate to major. To see all the charts from the most recent week, go here.

In the most recent survey, there was a notable decrease in the percent of manufacturers serving the medical industry, 32% in the most recent week versus 41% the week prior. This seemed to have a significant impact on the results of the survey and indicated that those manufacturers not serving the medical industry were facing a different situation than those serving the medical industry.

In March, durable goods capacity utilization was 67.8%, which was the first time the rate dropped below 70% since June 2010 and the lowest rate since April 2010. Compared with one year ago, capacity utilization contracted 10.9%. This was the 10th month in a row and the 11th of the last 12 months that capacity utilization contracted. Also, this was the fastest rate of month-over-month contraction since October 2009. 

The annual change in durable goods capacity utilization contracted at an accelerating rate for the fifth month in a row, falling to -2.3% from -1.4%. March was the fastest rate of annual contraction since January 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 at least into the third quarter of 2020.

In March, the index for production of durable goods was 99.4, which was the first time the index fell below 100 since July 2016. Compared with one year ago, the index contracted 9.7%, which was the seventh straight month of contraction. Also, March’s month-over-month rate of contraction was the fastest since October 2009.

The annual rate of change, which is easier to correlate with other data points, contracted 0.9% this month. This was the first month of annual contraction since April 2017.  The key leading indicator of production—durable goods new orders—is indicating contraction in production. And, of course, the COVID-19 pandemic is likely to cause significant contraction in industrial production in April and May.


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.