Business Index Produces Another Choppy Reading

The Precision Machining Index reports another month of volatile up and down readings.
 

Registering 57.0 for June, the Gardner Business Index (GBI): Precision Machining moved lower, after three prior months of volatile readings. Compared with the same month one year ago, the index is 3.0 percent higher. Gardner Intelligence’s review of the underlying data indicates that supplier deliveries, employment and production lifted the business index higher. The index’s average-based calculation  was pulled down by new orders, backlog and exports.
In recent months, Gardner Intelligence has shared the view that growth in supplier deliveries and employment—signs of more enduring changes to manufacturing production capacity—have increased significantly because of strong growth in new orders first observed in the fourth quarter of 2016. A decline in new order growth since the beginning of the year suggests that the expansionary phase of the business cycle may be getting closer to maturity.  
Backlog readings often act as a gauge of near-term industry conditions, by protecting manufacturers from short-term order volatility. The 18-month period starting in 2017 represents one of the longest periods of continuous backlog growth, with an average reading of 55.4. However, in the last five months, the data indicate that there has been a significant slowing of the backlog growth rate. That we are still experiencing backlog growth indicates that the industry should experience continued strong business conditions, at least in the near term.