July GBI: 54.4

The Gardner Business Intelligence (GBI) Business Index for July fell slightly from last month to 54.4, pulling down the year-to-date index average to 55.3.  Supplier deliveries, employment and production lifted the business index higher while new orders, backlog and exports pulled the index lower.  In the year-to-date and one-year ago periods, the Business Index is up 7.6 percent and 17.8 percent respectively.

New orders, production, and backlog:  The new order reading at 54.1 was lower than the month-ago period; however, when compared to the same month one year ago, the new orders reading is up over 20 percent.  Production, which typically closely mirrors the trend in new orders, at 57.4 was also lower from the month-ago period. Typically, a significant spread between new orders and production implies a change in backlogs is or is about to occur. Although the readings for production and new orders have both been very volatile in 2017, they have moved closely together. This may in part explain why the backlog measure has been largely stable during 2017, recording a year-to-date average of 52.0. The GBI team closely monitors the backlog reading as it is considered a bellwether to capacity utilization and ultimately machine tool sales.  The July backlog reading of 52.5 is slightly lower from one-month ago but up 4.6 percent from the beginning of the year.

Exports: The export reading at 48.6, retreated slightly in July.  For the year-to-date period, the export reading is 1.5% higher since the beginning of the year and has increased by 9.5 percent during the last 12-months.  While the export reading is better, values under 50 represent a contracting indicator.  At the same time, the value of the U.S. Dollar against other major currencies as measured by the Federal Reserve’s Real Trade Weighted US Dollar Index against Major Currencies indicates that the dollar’s value has increased by 1.5 percent over the past 12-months.  The improvement in the GBI export reading over the last 12-months despite a strengthening US dollar over the same time-period may indicate the tenacity of foreign demand for US durable goods. 

The fastest growing industries were hardware, primary metals, industrial motors/hydraulic/mechanical components, aerospace, electronics/computers/telecommunications, automotive, pumps/valves/plumbing products, forming/fabricating (non-auto), construction, metalcutting job shops, custom processors, plastics/rubber products, and machinery/equipment.  All other industries contracted.

In addition to the overall durable goods index, we compute indices for several technologies or processes. In July, Additive Manufacturing was the fastest growing technology. It was followed by  moldmaking, metalworking, finishing, precision machining, composites, and plastics.