Precision Machining Index: September 2016 - 48.7

The index jumped to its second highest level since February 2015.

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With a reading of 48.7, the Gardner Business Index showed that the precision machining industry contracted at a noticeably slower rate for the second month in a row. The index jumped to its second highest level since February 2015, which was the last time the index was above 50.

In September, the new orders index contracted after growing in August. However, production increased for the first time since April 2015. Even though it was still contracting, the backlog index remained improved for the fourth month in a row. The backlog index has improved quite a bit since November 2015. Employment contracted for the 14th month in a row, but the index generally has improved since April. While exports contracted again, the rate of contraction was minimal as the index reached its highest level since December 2014. After one month of shortening, supplier deliveries lengthened at their fastest rate since April.

Material prices have increased since March. The rate of increase accelerated in September after decelerating the previous two months. For the previous five months, the material prices index has been higher than at any time since February 2015. Prices received increased for the first time since September 2015. Future business expectations improved somewhat in September.

The electronics/computers/telecommunications industry grew at a fast rate in September, which was the first month of growth since May. The hardware industry grew for the first time since May, while the forming/fabricating industry grew for the first time since June. All other industries were flat or contracted in September. In particular, the medical industry contracted significantly after growing the previous two months.

In the September survey, we changed how we are asking about future capital spending plans. The change was to give respondents the option of selecting zero for future spending plans instead of a range from $0 to $125,000. So, we cannot really compare this month’s value to previous months.