Production Machining

DEC 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 Index Extends Expansion Post Tariffs Index Fortified by Supplier Deliveries, Production and New Orders 70 60 50 40 PRECISION MACHINING INDEX 70 60 50 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 1/13 7/13 1/14 7/14 1/15 7/15 1/16 7/16 1/17 7/17 October's Precision Machining Index reading provided encouraging news about the on-going economic expan- sion with supplier deliveries, produc- tion and new orders all driving the total index higher. As the second fastest expanding component of the GBI: PM index, recent new orders growth appears to be more than offsetting the losses of export orders as suggested by expanding backlogs. (Values are three-month moving average.) 53.5 n New Orders n Exports 56.3 PRECISION MACHINING NEW ORDERS AND PRODUCTION GARDNER BUSINESS INDEX: PRECISION MACHINING 22 PRODUCTION MACHINING :: DECEMBER 2018 R egistering 56.3 for October, the Gardner Business Index (GBI): Precision Machining moved slightly higher as new orders and employment moved strongly higher. Compared with the same month one year ago, the index decreased by 2.1 percent. For an eighth consecutive month, supplier deliveries have been the fastest expanding compo- nent, playing a significant role in sustaining the overall index's expansionary readings. Beyond supplier deliveries, Gardner Intelligence's review of all underlying components reveals that production and new orders also supported the index's latest reading. e index's average-based calculation was pulled down by employment, backlog and exports. Only exports reported a contractionary reading during the month. Despite exports recording a second month of contraction, new orders recorded a sharp gain in October. e current export environment for U.S. manufacturers is dynamic and complex. Not only have foreign tariffs on U.S. goods at rates as high as 25 percent hurt the competitive- ness of U.S. precision machinists, but a strong dollar has added to their struggles. e value of the dollar in the 7-month period ending in early November has appreciated by about 10 percent against the Chinese Yuan for a combined effect that now makes U.S. exports as much as 35 percent more expensive than they were only a few months ago. Gardner Intelligence is encouraged by the expansion of supplier deliveries, new orders and production, as they are indicators of the future health of manufacturing. Stay ahead of the curve with Gardner Intelligence. More information about the Precision Machining Index can be found at gardnerintelligence.com.

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