Production Machining

SEP 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 Business Index Quickly Decelerates Index decreases significantly over past two months. 60 50 40 PRECISION MACHINING INDEX 70 60 50 40 30 PRECISION MACHINING NEW ORDERS AND PRODUCTION 1/13 7/13 1/14 7/14 1/15 7/15 1/16 7/16 1/17 7/17 1/18 7/18 July's Precision Machining Index reading of 51.6 was significantly lower than other recent read- ings. The latest index reading was supported only by supplier deliver- ies; this is a change from recent quarters during which the index was dominantly driven by production and new orders. July new orders and backlogs fall into contractionary territory: For the first time since the third quarter of 2016, readings for both new orders and backlogs simultaneously contracted in July. However, the continuous expansion in backlogs during 2017 and much of the first half of 2018 suggests that manufacturers should be able to smooth current new orders volatility with unfulfilled orders. 51.6 n New Orders n Back Orders 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 :: SEPTEMBER 2018 R egistering 51.6 for July, the Gardner Business Index (GBI): Precision Machining moved several points lower during the month, indicating little additional industry expansion, but expansion nonetheless. Compared with the same month one year ago, the index declined by 3 percent. e last time the index experienced a year-over-year decline was in mid-2016. Gardner Intelligence's review of the underlying data indicates that only supplier deliveries lifted the averages-based business index higher. e index's average-based calculation was decreased by production, employment, exports, backlog and new orders. However, a single month's results don't make a trend. e latest data indicated significantly slower growth in production and employ- ment as compared with a month ago. For the first time since mid-2016, both backlogs and new orders reported contraction during the same month. For the first time since at least 2011, new orders were the fastest contracting component of the index. In addition to new orders, Gardner's survey data reported that backlogs and exports also contracted during the month. No month's readings are indicative of future months' readings, and it is possible that August's readings could be significantly better. e unemployment rate among manufac- turing laborers is presently extremely low, according to the Bureau for Labor Statistics. us, the latest Gardner employment reading may be the result of limited labor supply as opposed to weakness in the demand for laborers. Prior to the latest reading, backlogs expanded in each of the last 14 months. Stay ahead of the curve with Gardner Intelligence. More information about the Precision Machining Index can be found at

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