Supply-Chain Improvements Continue to Lead Growth
Registering 55.6 for July, the Gardner Business Index (GBI): Metalworking continues to report readings well above average.
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Supplier deliveries was the only component in July to move higher while all other components indicated slowing growth. The employment reading, which until this month had indicated expanding growth fell sharply. Given the tight labor market, weakness in the employment reading may be more indicative of employers not being able to find new hires rather than weakening demand for labor.
The leading indices for July were employment and supplier deliveries, the latter of which has experienced record growth. In response to recent growth, the supply chain seems to have adapted to higher volumes.
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According to Gardner Intelligence, while July was the fourth consecutive month of slowing growth after reaching an all-time high in February, June’s reading of 57.5 was still exceptionally high when compared to the index’s historical average reading of 51.0. The positive drivers of July’s index were supplier deliveries and production. Readings for employment, new orders, backlog and exports lowered the index’s average-based calculation. This is the third consecutive month in which new orders weighed down the overall index result.
Strong expansion in supplier deliveries suggest that the metalworking supply chain has and continues to grow to handle the robust demand for products, while the slowing growth of new orders and production suggests that we are well along the growth side of the business cycle. However, regular backlog growth since February of 2017 suggests that the industry should be well situated overall to handle temporary obstacles that would slow the industry’s expansion.
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