Precision Machining Soars with 6-Point Gain in February
Broad-based gains in business activity near three-year high.
Precision Machining Business Index: Overall business activity quickly expanded during February as challenging supply chain conditions coupled with expanding new orders activity resulted in backlogs making one their largest one-month gains in recorded history.
The Gardner Business Intelligence (GBI): Precision Machining Index jumped six points in February to 59.2 and a near three-year high reading (see last month’s reading). The latest reading was driven by strongly expanding new orders, backlog and supplier delivery activity. Production and employment logged smaller gains during the month and export activity gained five points to match its past high over the last year. A nine-point gain in backlog activity set a near three-year high and brought backlog activity well into expansionary territory for the first time since May 2019. Mirroring the state of manufacturing, in general, precision machining backlog levels are now expanding as hindered supply chains remain unable to meet the demand of downstream production, causing new orders to pile up.
Production Activity Limited by Congested Supply Chains: Sluggish order-to-delivery times are resulting in the delayed arrival of input goods, which is limiting production activity and causing a surge in backlogs.
February’s supplier delivery reading — in excess of 71 — places it well above the reading established at the peak of the last manufacturing upcycle in early 2018. Challenging supply chain conditions not only impact production but also materials costs. The history of the Gardner Business Index (GBI) bears out this critical insight as manifested by the highly correlated movement of supplier deliveries and material prices readings. This relationship suggests that even limited disruptions to supply chains can result in significant price changes for upstream goods.