Industry Expansion Still Looking Up

The Gardner Business Index: Precision Machining expanded at a slightly slower rate as compared with April, registering 54.5 for May. Compared with the same month one year ago the index is 9.1% lower. Early in 2018 the index set an all-time high and then spent the remainder of 2018 returning or more typical growth levels. In the year-to-date period the index has averaged 54.9. Index readings above 50 indicate expanding business activity while a value of 50 indicates no change, and a reading below 50 indicates contracting business activity. Gardner Intelligence’s review of the underlying components of the index revealed that the Index was led higher by accelerating activity in production, new orders and supplier deliveries. The index, a calculated average of its six components, was pulled lower marginally by employment and further by exports and backlogs. Among all the components which comprise the index, only exports contracted during the month.

A significant increase in the reading for new orders in May combined with a more modest increase in production activity helped elevate backlog activity for a third consecutive month. The resilience of total new orders activity in light of modestly contracting exports over the last year alludes to the strength of the domestic precision machining industry’s strength.  May’s data also extended the year-to-date trend in increasing employment activity. This trend in the year-to-date period is a welcome reversal of the slowing expansion trend in employment observed during the second half of 2018.