Precision Machining Index Sets All-Time High
This was the first time since January 2020 that export activity reported expanding conditions.
The Precision Machining Index set a new all-time high as a result of elevated supplier delivery, new orders and production readings. All components of the index expanded in March for the first time since early 2019.
The Gardner Business Intelligence (GBI): Precision Machining Index added five points to its recent upward trend to close March at 64.0, setting a new all-time high (see last month’s reading). The month’s gains were broad-based with all six components of the Index reporting expanding activity conditions. This was the first time since January 2020 that export activity reported expanding conditions. Supplier delivery, new orders and production readings led the Index higher followed by smaller but significant advances in elevated backlogs, hiring and export orders.
March marks the one-year anniversary of COVID-19’s initial impact on the Precision Machining Index and especially supply chains. COVID-19’s prolonged impact on supply chains has hampered production and elevated backlogs in the face of rising new orders.
The three-month period ending March has seen production readings consistently trail behind total new orders. This has resulted in quickly rising backlog levels. As previously reported, challenging supply chain conditions have been a significant factor in the struggle to bring production up to the level demanded. To understand the magnitude of this challenge, consider that the current supplier delivery reading at nearly 77 is roughly nine points higher than the pre-COVID-19 pandemic peak reading of 68. However, in order for the index to have increased by those nine points means that 60% more survey respondents in the latest survey may have reported worsening supply chain conditions as compared to the prior peak!
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