Over the last few weeks several measures of durable goods have improved markedly.
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.
E-Commerce sales increased to $681.77B in 2Q2020, representing a 10.5-percent increase compared to the prior quarter. This shift in consumer behavior creates opportunities for those manufacturers willing and able to adopt to shifting consumer preferences.
COVID’s unique impact on the manufacturing economy and beyond means that the normal interpretation of diffusion indices around the world needs a re-think. The breakdown of supply chains has distorted the reading for supplier deliveries, causing the GBI and other indices like it to register inflated readings. The solution to this is to watch the index components independently with added attention given to new orders and production.
In general, the trend in the year-over-year change in the real 10-year Treasury was moving down (more negative) the last six years, which was a positive sign for durable goods manufacturing.
In July, durable goods capacity utilization was 68.1%, which was the third month in a row the rate of capacity utilization moved higher.
Compared with one year ago, the index contracted 9.8%, which was the third month in a row that the month-over-month rate of change in the index decelerated and the first month the rate of change contracted less than -10.0% since March.
This was the fourth consecutive month that the month-over-month rate of change was faster than 44%. However, the rate of growth decelerated for the second straight month.
While June’s rate of contraction was still a fast rate of month-over-month contraction, it was a slower rate of contraction than the previous two months.
The month-over-month rate of contraction in machine tool unit and dollar orders slowed sharply in June. The annual rate of contraction may be near or at a bottom.
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