It seems clear that the rate of growth in new orders of durable goods has peaked and will grow slower heading into 2019. This becomes more likely when looking at the trend of real consumer durable-goods spending, a good leading indicator of real new orders in durable goods. Spending growth has slowed sharply the last couple of months, indicating slowing growth in new orders.

In February, the year-over-year change in the 10-year Treasury rate was -47 basis points, which was the second straight month the change was below zero and the lowest change since January 2018. It’s quite possible that the change in the 10-year Treasury rate has reversed course and is now a positive leading indicator for housing permits as well as manufacturing, durable goods and capital equipment. 

The GBI: Metalworking backlog index – an excellent leading indicator of durable-goods capacity utilization – indicates a peak in capacity utilization may have arrived as the annual rate of growth in backlogs peaked in October 2017. The backlog index tends to lead the annual rate of growth in capacity utilization by seven to 10 months. 

Its likely the annual rate of growth reached its peak rate in February as durable goods new orders grew slightly slower the last six months.

It’s quite possible that the change in the 10-year Treasury rate has reversed course and is now a positive leading indicator for manufacturing, durable goods spending and capital equipment.