Index Above 60 for Second Month
The Precision Machining Index continues its 2018 expansion after another month of laudable growth.
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The February reading of the Precision Machining Index at 60.4, marked another strong month of expansion for the industry. Recent data indicate that manufacturers are working hard with their suppliers to clear what has been a growing backlog of orders early in the year.
In this chart, the yellow line represents supplier deliveries and the blue line represents backlog. Months of strong new order demand has resulted more recently in increased backlogs. The latest month’s data indicate that manufacturers are pushing hard on suppliers to help increase production levels and satisfy heightened demand.
Registering 60.4 for February, the Gardner Business Index: Precision Machining (PMI) finished another month of laudable growth. Compared with the same month one year ago, the index increased by more than 4 percent. Readings in February and March of 2017 marked the highest readings of their calendar year. Compared with the average 2017 reading, the latest figure is 8.2 percent higher. Gardner Intelligence’s review of the underlying data indicates that production, supplier deliveries, new orders and backlog all lifted the business index higher, while employment and exports pulled the index lower. For a third month in a row, no components contracted as exports reported a reading of 50, indicating no change from the prior month.
For a second month in a row, supplier delivery growth moved sharply higher while all other index components recorded lower readings from the prior month. Strong growth in new orders since the fourth quarter of 2017 has had a significant impact on more recent readings of backlog and supplier deliveries as manufacturers struggle to meet the demand placed upon them by strong new orders levels. Despite growing supplier deliveries and production readings, recent backlog readings continue to be unusually high. As manufacturers work to clear this backlog of orders, Gardner Intelligence expects at least the first-half of 2018 to be very good for the manufacturing industry.
