January GBI: 57.8

The Gardner Business Index (GBI) continued into 2018 on the same upward trajectory that it followed during the last quarter of 2017. Compared to the same month one year ago, the index is up 5.9 percent.  Gardner Intelligence’s review of the underlying data indicates that the index during January was driven higher by new orders and production, both of which increased significantly over the prior month’s already elevated levels.  Measures of supplier deliveries and employment by historical standards also registered very strong results for the month while backlog and exports pulled the index lower.  None of the six components of the index contracted in the month.

New orders and production both registered markedly higher readings to start off the new year.   As reported in December, when the expansion of new orders exceeds that of production, this tends to precede periods of strong growth in the total index and by extension the manufacturing industry.  As would be expected, the faster expansion of new orders as compared to production resulted in an increase of the backlog component of the index.

The backlog reading in January broke its all-time high, finishing 6.9 percent higher from just one month ago and 10.4 percent from the same month one year ago.  As previously reported, 2017 was the first calendar year in the history of the index during which the backlog index reported a reading of 50 or higher during all 12 months. Gardner expects that this trend will continue for at least as long as new orders growth continues to exceed production growth. 

Gardner also attributes some portion of the increase in new orders in January to increases in exports as indicated by recent expansionary export readings. A weakening U.S. dollar in 2017 and strong global economic growth are likely drivers of the increase in exports of manufactured products as captured by our data.

The fastest growing industries were electronics/computers/telecommunications, industrial motors/hydraulic/mechanical components, medical, construction, petrol processors, plastics/rubber products, aerospace, metalcutting job shops, hardware, forming/fabricating (non-auto), primary metals, 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 January, Automotive was the fastest growing technology. It was followed by Additive Manufacturing, Composites, Metalworking, Moldmaking, Finishing, Production Machining, and Plastics Technology.