In June, the index for production of durable goods was 95.2. The index increased for the second month in a row after reaching the second-lowest level for the index since January 2010. Compared with one year ago, the index contracted 14.5%, which was the second month in a row that the month-over-month rate of change in the index decelerated. 

The annual rate of change, which is easier to correlate with other data points, contracted 6.6% this month. This was the fourth consecutive month of accelerating contraction. The key leading indicator of production—durable goods new orders—is indicating further contraction in production.

 

Even though the annual rate of contraction was accelerating rapidly in June, it was still a long way from the fastest rate of contraction, 19.8%, during the financial crisis. Even if the index remained at its current level, the annual rate of change wouldn’t even contract half as fast as it did during the 2008-09 financial crisis. The rate of contraction should bottom out in the third or fourth quarter of 2020.

We track industrial production and its leading indicators for a number of industries.

Accelerating Growth: 

Decelerating Growth: electronics/computers, military

Accelerating Contraction: aerospace, appliances, automotive, construction materials, custom processors, durable goods, food/beverage processing, forming/fabricating (non-auto), furniture, hardware, HVAC, industrial motors/hydraulics/mechanical components, machinery/equipment, medical, metalcutting job shops, oil/gas-field/mining machinery, off-road/construction machinery, petrochemical processors, plastic/rubber products, power generation, primary metals, printing, pumps/valves/plumbing products, ship/boat building, textiles/clothing/leather goods, wood/paper products

Decelerating Contraction: