June GBI -- 55.5

The Gardner Business Index for June declined to exactly the year-to-date average of 55.5. Each of the components in the GBI survey fell compared to one month ago.  While the Gardner Business Index and its components were lower in June, all readings were well within the range of results observed for the year-to-date and did not meaningfully alter the Index’s impressive gains over the last year.

While all survey components indicated declines, the silver-lining in this month’s data is that the index for material prices fell significantly more than any other component, including Prices Received which moved only slightly lower.  This comparable decline may indicate an abatement of the margin compression trend that has occurred since the end of 2016 and discussed in detail in May’s report.

Furthermore, the overall positive movement of the GBI in 2017 conceals the particularly strong results reported by Job Shops in the year-to-date period.  Among reporting Job Shops in 2017, the Production and New Orders sub-indexes have improved by over 20%. The latest values for both sub-indexes are near 60.

From May to June, the Index’s Production component fell by 4.1%, moving just below the year-to-date average.  As compared to the same year-to-date period in 2016, the reading is up 13 points from 47.7 to 60.7.  This represents a significant turn-around in the condition of production from one of slight contraction to that of confident expansion.

The New Order component fell over 4 percent from May, registering a value of 57.9 for June. Compared to its value one-year-ago, the New Orders component has increased by 32 percent.  It should be noted that the New Orders reading at June of 2016 was the lowest reading for New Orders since at least 2012. 

The Export index component after registering a multi-year high of 50 in May, retreated slightly in June to 49.0.  While there are many factors that influence exports, Gardner Intelligence has observed that the timing and movement of the GBI Export reading is inversely correlated with the U.S. Dollar Index against major currencies.  The Dollar Index’s steady trend lower in 2017, indicating a weakening dollar against major foreign currencies is consistent with the upward trend in the GBI Export data.  If the U.S. Dollar Index continues its weakening trend, Gardner Intelligence will expect export readings to further improve.

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

In addition to the overall durable goods index, we compute indices for several technologies or processes. In June, moldmaking was the fastest growing technology for the second month in a row. It was followed by, metalworking, precision machining, finishing, composites, and plastics.