The change in the 10-year Treasury rate is a good leading indicator of housing permits, construction spending, consumer durable-goods spending, durable goods new orders, and capital equipment spending. A decreasing year-over-year change in the real 10-year Treasury rate should lead to increases in all of these data points down the line.

Durable goods production decelerated for the third month, and the continued deceleration in durable goods new orders indicates that more slowing in production is ahead.

The GBI: Metalworking backlog index – an excellent leading indicator of capacity utilization in durable goods – indicated a peak in capacity utilization had hit at the end of last year 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.

The rapidly accelerating contraction in 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 and might turn into contraction later in 2019.

The GBI: Metalworking has been negative leading indicator for future machine tool orders for a number of months. It is clear that machine tool orders are in the midst of a decelerating growth phase and likely to see an annual rate of contraction later this year.