Industry Analysis

Arrow denotes 12-month moving total/average direction

Retail Sales

  • Monthly US Total Retail Sales declined an unprecedented 16.6% from March to April, due in part to stay-at-home orders
  • Annual Retail Sales declined in April, and decline is expected to persist into early 2021
  • Food and Beverage Retail Sales and Non store Retail Sales are growing at double-digit rates as consumers eat, drink, and shop from home

Wholesale Trade

  • Annual total US Total Wholesale Trade ticked down in March, but was 0.4% above the year-ago level
  • Both the Durable and Nondurable Goods segments will decline into early 2021
  • Deflationary pressures and a weaker US economy will contribute to lower spending in Wholesale Trade this year

Auto Production

  • North America Light Vehicle Production fell 27.6% from February to March, the sharpest February-to-March decline in the 93-year data history
  • Annual Production will decline into early 2021
  • Monthly US Light Vehicle Retail Sales in April were down 46.6% from the same month one year ago, an ominous signal for the industry

Manufacturing

  • Monthly US Total Manufacturing Production declined a record 14.7% from March to April
  • Hit by COVID-related shutdowns, the US Manufacturing Capacity Utilization Rate plummeted in April, falling from 71.3% in March to a record low 61.4%
  • Manufacturing Production is expected to decline into early 2021

Rotary Rig

  • The US Rotary Rig Count averaged 710 rigs in the three months through April, down 31.0% compared to the same three months a year ago
  • Expected decline in US Industrial Production and World Industrial Production into early 2021 suggests limited demand for inputs, including oil, during this time
  • US Mining and Oil Field Machinery Production for the month of April came in 27.1% below April 2019; expect more decline ahead given limited industry capex

Capital Goods

  • Annual US Nondefense Capital Goods New Orders (excluding aircraft) ticked down in March
  • In contrast, annual US Defense Capital Goods New Orders rose further in March, up 6.7% from the March 2019 level
  • Be prepared for business-to-business activity, as measured by US Nondefense Capital Goods New Orders (excluding aircraft), to be below the current level into at least 2021

Nonresidential Construction

  • Annual US Total Nonresidential Construction rose further in March, up 3.3% from last year
  • Construction spending will transition to decline imminently as COVID-19 repercussions ripple through the market
  • Decline will persist into at least mid-2021

Residential Construction

  • The recovery trend in annual US Total Residential Construction persisted in March; the annual total was virtually even with the year-ago level
  • Monthly US New Homes Sales in March came in 10.3% below the March 2019 figure
  • We expect business cycle decline to take hold imminently in both Single-Unit and Multi-Unit Housing Starts and for decline to extend into late 2020 (Single-Unit) or early 2021 (Multi-Unit)

Leading Indicator Snapshot

Key Takeaways

  • Updated leading indicator data suggests that business cycle decline in US Industrial Production will persist through at least the end of this year
  • The ITR Leading Indicator™, the ITR Retail Sales Leading Indicator™, and the US ISM PMI (Purchasing Managers Index) lost tentative lows due to the economic impacts of the double black swan events
  • Sharp decline in the US Total Industry Capacity Utilization Rate suggests the aforementioned impacts will contribute to markedly diminished industrial sector activity into at least the second half of this year