Production Machining - Your access to the precision machining industrial buyer.
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STEVEN R. KLINE, JR. Director of Market Intelligence Gardner Business Media Inc. gardner web.com/economics/blog To see the historical breakdown of our business index and each of its subindices, visit short.productionmachining.com/GBI. W ith a reading of 49.2, the Gardner Business Index showed that the precision machining industry contracted for the 12th month in a row. However, the index has increased signifcantly over the previous four months, indicating that the industry reached a bottom back in November 2015. In February, the index was at its highest level since March 2015, which was the last time the index was more than 50. New orders increased for the frst time since March 2015, with the index making a huge jump the previous four months. Production contracted for the 10th month in a row, although the rate of contraction was negligible. While the backlog index contracted for the 19th consecutive month, the index has improved notably since November. Te trend in the backlog index indicated that the industry should be nearing its low in capacity utilization. Employment contracted for the eighth consecutive month, but the index has improved fairly consistently since October. Because of the strong dollar, the export index has contracted since March 2014. However, the rate of contraction has slowed the previous three months. Supplier deliveries lengthened for the second time in three months, indicating that activity throughout the supply chain was picking up. Material prices increased for the frst time since June. However, the increase was minimal and well below the rate of March 2016-49.2 Supplier deliveries lengthened for the second time in three months. increase in material prices from 2013 through the frst half of 2015. Prices received at machine shops have decreased every month but one since September. Future business expectations improved dramatically in March, reaching their highest level since March 2015. Facilities with more than 250 employees expanded for the second time in three months. During those two months of expansion, the rate of expansion was strong. Plants with 100 to 249 employees contracted for the second month in a row. Companies with 50 to 99 employees expanded at a signifcant rate in March for the frst time since July. Companies with 20 to 49 employees grew for the frst time since April 2015. Shops with fewer than 20 employees continued to contract, but in March they contracted at their slowest rate since September 2015. For the third month in a row, the Southeast region was the strongest region. However, it was not the only region to expand in March. Te West and Northeast regions also expanded. While the South Central continued to contract, it was virtually fat in March. Te North Central-West and North Central-East continued their relatively long periods of contraction. Future capital spending plans were at their second lowest level since the survey began in December 2011. Compared with one year ago, spending plans were down almost 33 percent. Despite the decrease in March, recent months have showed that the contraction in capital spending plans was decelerating. Sub-Indices March February Change Direction Rate Trend New Orders 54.3 42.8 11.5 Growing From Contracting 1 Production 49.6 43.5 6.1 Contracting Slower 10 Backlog 43.4 43.1 0.3 Contracting Slower 19 Employment 49.6 47.5 2.1 Contracting Slower 8 Exports 47.0 45.6 1.4 Contracting Slower 24 Supplier Deliveries 51.4 47.8 3.6 Lengthening From Shortening 1 Material Prices 50.7 43.0 7.7 Increasing From Decreasing 1 Prices Received 47.4 50.0 -2.6 Decreasing From Same 1 Future Business Expectations 70.1 56.9 13.2 Improving More 52 Precision Machining Business Index 49.2 45.0 4.2 Contracting Slower 12 GARDNER BUSINESS INDEX: PRECISION MACHINING 26 PRODUCTION MACHINING :: MAY 2016