10/4/2019 | 1 MINUTE READ

Metalworking Index Contraction Slows

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Activity contraction slows as the Index approaches 50.

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The Gardner Business Index (GBI): Metalworking moved higher in September registering 48.6. An index reading that moves higher but is below 50 indicates that the rate of contracting business activity is slowing. Index readings above 50 indicate expanding activity while values below 50 indicate contracting activity. The further away a reading is from 50, the greater the change. Gardner Intelligence’s review of the underlying index components observed that the Index, which is calculated as an average of its components, was supported by supplier deliveries, production and new orders. In contrast, contracting employment, exports and backlog activity suppressed the Index from moving higher.

 

GBI: Metalworking-- Employment (3MMA) 

GBI: Metalworking-- Employment (3MMA) 
Employment is generally a slow-moving component of the Business Index due to the difficulty in finding or rehiring quality labor. In recent months however, the Index’s employment component has moved quickly into contractionary territory.

September registered another month of production growth coupled with contracting new orders. It was, therefore, unsurprising that backlogs registered another month of significant contraction. The September data registered a second consecutive month of contracting employment. Historically, the employment component of the Business Index has lagged most of the other components as shops are loathe to give up good labor, which will be hard to find again later. The difficulty and lengthy process involved in finding good talent makes the employment component not only an indicator of hiring trends but also indicative of the mid-term business outlook of shop managers.

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