Moldmaking Index Edges Higher on Production and Employment

The Gardner Business Index (GBI): Moldmaking edged slightly higher in June to 52.3, signaling some increase in business activity compared to the prior month. 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 in business activity. Compared to June 2018, the Index is 11.4% lower. The May 2018 reading marks the end of a string of substantially elevated readings caused by the market cycle’s peak in the first half of 2018. Gardner Intelligence’s review of the month’s underlying data found that production and a significant turnaround in employment lifted the Index higher. New orders, supplier deliveries and backlogs all expanded slightly, but fell below the average component reading, pushing the Index lower. For the month, only exports experienced a contraction.

Employment activity has increased sharply since its nadir in late 2018. The latest monthly reading of employment activity nearly matched the record high set at the peak of the most recent business cycle.

Including June’s results, the 3-month moving average reading for new orders and production continues to expand. The expansion in new orders remains hampered by weakness in exports. Exports have been contracting modestly since the middle of 2018, the timing coincides with the start of tougher U.S. trade regulations with certain trading partners.

Employment data provided by survey participants to the Moldmaking Index continue to report strong growth after setting a recent low at the end of 2018. June’s employment reading was the highest since March 2018, placing this month’s employment activity change on par with the level of activity recorded at the peak of the latest business cycle.