Contraction in Monetary Base Decelerates for Third Month

July was the first month since October 2018 that the monetary base contracted less than 10%.

In July, the monetary base was $3.276 trillion, which was the second lowest level since June 2013 (only May 2019 was lower). May was the 17th consecutive month of month-over-month contraction in the monetary base. For each of the last eight months, the month-over-month rate of contraction was faster than 10%. Only the 10-month period from June 1921 to March 1922 had a longer streak of double-digit month-over-month contraction . That said, the month-over-month rate of contraction actually decelerated for the third straight month.

The annual rate of change in the money supply continued to contract at an accelerating rate for the 10th month in a row, falling to -10.6%. This was the fastest rate of annual contraction in nearly a century, but this should change soon with the 1-month and 3-month rate of change both contracting at a decelerating rate. Though the money supply is indicating that the current decelerating growth in machine tool orders (and quite likely capital equipment in general) will continue for some time, we are starting to see the signs of a turn in the money supply that should lead to a turn in machine tool orders 12-18 months later.


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.