Production Machining

JUL 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 Growth Improves in May Precision Machining Index Reports Third Highest Reading 60 50 40 PRECISION MACHINING INDEX 60 50 40 30 May Precision Machining Index reading of 59.7 increased from the prior month and represents the fourth highest reading of the GBI: PM in recorded history. The index is presently being driven by supplier deliveries and employ- ment as opposed to new orders and production. Since 2011, backlogs have recorded three distinct periods of expansion. Of these three, the current period is by far the longest at 18 months if we ex- clude the May 2017 reading. By comparison, the prior expansion- ary periods lasted approximately seven months (2014) and three months (2012). 53.5 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 1/18 7/18 BACKLOG EXPERIENCING ITS LONGEST GROWTH STREAK IN RECORDED HISTORY GARDNER BUSINESS INDEX: PRECISION MACHINING 22 PRODUCTION MACHINING :: JULY 2018 R egistering 59.7 for May, the Gardner Business Index (GBI): Precision Machining rebounded to near record territory after a drop in April. Compared with the same month one year ago, the index is 7.1 percent higher. Gardner Intelligence's review of the underlying data indicates that supplier deliveries, employment and production lifted the business index higher. e components, which lowered the index's average-based calcu- lation, included new orders, backlog and exports. In a surprise move, exports expanded strongly during the month, posting the highest reading since 2011. is month's data again supports Gardner Intelligence's manufacturing business cycle theory, which posits that new orders and production precede changes in supplier deliveries and employment. As new orders abruptly increased during the first quarter of 2018, manufacturers made immediate but limited changes to their production levels. However, for shops to sustain increased production levels, or achieve more than modest production increases, manufacturers must ultimately alter supply delivery schedules or volumes and potentially increase employment levels. ese changes to supplier deliveries and employment typically happen months after the initial change in new orders, making them lagging indicators. Backlog readings through the year-to-date period continue to be strongly elevated with an average reading of more than 60. is indicates that the industry is still receiving higher levels of work than they can process with their current capacity. Stay ahead of the curve with Gardner Intelligence. More information about the Precision Machining Index can be found at gardnerintelligence.com. 59.7

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