Index Sees Sharp Course Correction

Registering 56.2 for August, the Gardner Business Index (GBI): Precision Machining reversed course, moving higher and breaking its year-to-date trend of slowing growth. The latest reading places the index just below its average reading since the start of 2017, roughly marking the start of the current and latest business growth cycle. Compared with the same month one year ago, the index increased by 3.6 percent. Gardner Intelligence’s review of the underlying data indicates a turnaround by all components of the index except for supplier deliveries, which fell, but from an almost all-time high reading. The index was supported by supplier deliveries, production and employment. The index’s average calculation was weakened by backlog, new orders and exports. All components of the index registered growth during the month.

August witnessed a resumption of growth of the three components, which contracted in July. Those components, returning to expansionary levels, included backlogs, new orders and exports. The broad-based expansion of the index in August is encouraging. These expansions suggest that the macroeconomic environment or its outlook is generally thought to be improving. This contrasts with the situation experienced during the second quarter of this year when the index was generally sustained by only supplier deliveries and employment. Ultimately, it will require several future months of readings to determine whether this recent rebound in economic condition readings is more than a temporary event.