Published 2/9/2018

Metalworking Index Starts 2018 Sharply Stronger

The Gardner Business Index: Metalworking shows that new orders, including export demand, are driving industry expansion.

Economics

Michael Guckes

Former Chief Economist & Director of Analytics, Gardner Intelligence

The Metalworking Index started off 2018 setting new multi-year high readings, driven by production and new orders. For the second month in a row, new order expansion was greater than production, causing an increase in backlogs. Exports also grew for the second month consecutively.

The impressive growth in new orders has been driven, in part, by the growth of international demand for manufactured goods. Since mid-2016, exports readings have gradually and consistently improved. Exports reported their first expansionary reading in September 2017 before reporting two further expansionary readings in December and January. (Chart of three-month moving averages does not illustrate single-month expansion.)

Registering 59.1 for January, the Gardner Business Index (GBI): Metalworking started off 2018 by setting a new record high. Compared to the same month one year ago, the Metalworking Index grew by more than 9 percent. Gardner Intelligence’s review of the underlying data for the latest month indicates that strong increases in the expansion of new orders and production drove the business index higher. Although supplier deliveries and employment readings both expanded for another month, they did not raise the index. Yet backlogs, which increased significantly during the month, along with exports pulled the index lower. All components of the Metalworking Index expanded during January. For a second month in a row, new orders outpaced production. Gardner Intelligence’s review of past data trends suggests that when new order growth exceeds production, manufacturers can expect continued industry growth.

The index reading calculated among only metalcutting job shops increased greatly as well during the month, setting its own multi-year record high. Compared to the same month one year ago, this index grew by 8.3 percent. During January, metalcutting job shops reported very strong growth in new orders, production and supplier deliveries.