MoldMaking Index Stumbles as Components Contract
The Gardner Business Index (GBI): Moldmaking contracted sharply in August, falling more than 4 points to 46.4. 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. The latest reading marks a nearly three-year low in the Index. Gardner Intelligence’s review of the underlying data for the month found that all components recorded contracting readings. Such an instance last occurred only in late 2015. Supplier deliveries, employment and production reported values only slightly below 50; in contrast, exports, new orders and backlogs all reported significantly worse contracting activity.
The Moldmaking Index reported its first contracting reading since the fourth quarter of 2016. In an unusual move, all Index components registered simultaneous contractionary readings.
In the year-to-date period, new orders activity has expanded faster than production in only one month (May); this has been in part possible through the reduction of backlog levels. Contracting readings in both exports and new orders implies that domestic orders are no longer offsetting weakening foreign orders. Export orders initially showed signs of contracting activity in 2018.
Production activity contracted during August in part due to weakness in new orders and exports. Production activity has been one of the stronger components of the Moldmaking Index in 2019, but this may be in part due to survey participants having relied on backlogs in recent months to sustain production levels.