Metalworking Index Holds Steady After Scorching First Quarter

The unchanged reading resulted from a rising supplier delivery reading that was offset by slowing expansion in most other index components. Supplier delivery activity posted its fifth sequential all-time high in May. The latest reading is almost 17 points above the pre-COVID high established in mid-2018. New orders, production and employment activity reported slowing expansion during the month. Export activity contracted for a second consecutive month after posting a multi-year high in March.

Historically, production and new orders readings have moved very closely together, with production readings frequently posting slightly higher readings, however, this relationship has been under pressure since the beginning of the year. 

May’s results marked the fifth consecutive month in which new orders readings exceeded that of production. This trend is the first of its kind since at least 2011, when the Gardner Business Index was established. The shift in balance has thus far resulted in quickly rising backlog readings that have approached all-time highs in recent months. Quickly rising backlogs provide direct evidence of both strong demand and the production challenges stemming from this year’s supply chain and employment constraints.