Fastest Index Growth since August

With a reading of 51.8, the Gardner Business Index showed that the production machining industry expanded at its fastest rate since last August. The industry clearly has been trending up since November. The industry has expanded 2 of the previous 3 months. However, compared with 1 year ago, the index has contracted the previous 2 months. The annual rate of change continued to grow at a slower rate.

New orders expanded for the second time in 3 months. The index shot up in February to its highest level since May last year. Production grew for the 14th consecutive month. So far this year, production has expanded at a noticeably faster rate than it did during the last 4 months last year. Backlogs contracted at virtually the same rate as last month.

Compared with 1 year ago, the index has contracted for 5 straight months. Therefore, capacity utilization should see its peak rate of growth any month now. Employment expanded again after contracting for just one month. Exports continued to be hurt by the accelerating strengthening of the dollar against other currencies. 

Material prices increased at a noticeably faster rate in February. However, the rate of increase was still well below what it was last year. The prices received index has slowly but steadily improved since November. Future business expectations improved slightly this month, but have been mostly flat the previous 4 months.

Plants with 100-249 employees expanded at a much faster rate in February, while plants with 50-99 employees expanded for the 17th straight month. Shops with 20-49 employees expanded for the third time in 5 months. Shops with fewer than 20 employees contracted for the ninth consecutive month. 

After contracting at the fastest rate last month, the West was the fastest growing region in February. It has expanded in 2 of the previous 3 months. The Northeast was the second fastest growing region. It has expanded in 3 of the previous 4 months. It was closely followed by the North Central – East, which has grown every month but one since January last year. The North Central – West expanded for the second month in a row after 3 months of contraction.

Future capital spending plans for the next 12 months took another big hit in February. They contracted 25.4 percent compared with February last year. This was after contracting 50.4 percent the previous month. However, the annual rate of change moved from contraction to growth in February, which shows how much projected capital spending was improving prior to the previous 2 months.