Production Machining

AUG 2018

Production Machining - Your access to the precision machining industrial buyer.

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MICHAEL GUCKES, MBA Chief Economist, Gardner Intelligence Michael has performed economic analysis, modeling and forecasting work for almost 20 years among a range of industries. Michael received his B.A. in political science and economics from Kenyon College and his MBA from The Ohio State University. mguckes@gardner web.com Business Index Produces Another Choppy Reading Index Reports Another Month of Volatile Up and Down Readings 60 50 40 PRECISION MACHINING INDEX SUPPLIER DELIVERIES AND EMPLOYMENT NOW PREDOMINANT INDEX DRIVERS June's Precision Machining Index reading of 57.0 added another month of volatile readings to the index. The latest index reading was supported predominately by sup- plier deliveries and employment, this is a change from 2017 when the index was driven by production and new orders. Since April, supplier deliveries and employment have been the most significant drivers of the Precision Machining Index. Both measures are considered lagging indicators, as they typically lag changes in new orders and production. This may be an early indication that the economic expansion within production manufacturing is close to maturity. 57.0 n Employment n Supplier Deliveries 7/13 1/14 7/14 1/15 7/15 1/16 7/16 1/17 7/17 1/18 7/18 65 60 55 50 45 40 1/13 7/13 1/14 7/14 1/15 7/15 1/16 7/16 1/17 7/17 1/18 7/18 GARDNER BUSINESS INDEX: PRECISION MACHINING 24 PRODUCTION MACHINING :: AUGUST 2018 Stay ahead of the curve with Gardner Intelligence. More information about the Precision Machining Index can be found at gardnerintelligence.com. R egistering 57.0 for June, the Gardner Business Index (GBI): Precision Machining moved lower, after three prior months of volatile readings. Compared with the same month one year ago, the index is 3.0 percent higher. Gardner Intelligence's review of the underlying data indicates that supplier deliveries, employment and production lifted the business index higher. e index's average-based calculation was pulled down by backlog, new orders and exports. In recent months, Gardner Intelligence has shared the view that growth in supplier deliveries and employment—signs of more enduring changes to manufacturing production capacity—have increased significantly because of strong growth in new orders first observed in the fourth quarter of 2016. A decline in new order growth since the beginning of the year suggests that the expansionary phase of the business cycle may be getting closer to maturity. Backlog readings often act as a gauge of near-term industry conditions, by protecting manufacturers from short-term order volatility. e 18-month period starting in 2017 represents one of the longest periods of continuous backlog growth, with an average reading of 55.4. However, in the last five months, the data indicate that there has been a significant slowing of the backlog growth rate. at we are still experiencing backlog growth indicates that the industry should experience continued strong business condi- tions, at least in the near term.

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