The Gardner Business Index (GBI) closed the 2017 calendar year at 56.2, rising slightly from the prior month.  For the calendar year the index averaged 55.5.  Gardner Intelligence’s review of the underlying data indicates that the index in the final month of the year was supported by new orders, production, supplier deliveries, and employment while backlog and exports pulled the index lower.  New orders expanded sharply in December after slowing in November.  The export component of the index finished 2017 above 50.  This was the second time in 2017 that exports recorded expansion, the first time was in October.  For the year, the GBI index increased by 10.9 percent, marking its greatest calendar year growth since at least 2012.

During the fourth quarter of 2017, the reading for new orders was more often greater than the reading for production.  As reported previously, when the index for new orders exceeds the reading for production, this tends to precede periods of strong growth in the total index.  The quickening of new orders over production often means that manufacturing activity must increase so that manufacturers can handle the growth in new order volumes.  The average production and new orders reading for calendar year 2017 were 59.7 and 58.6 respectively, well above their 2015 and 2016 averages.  2017 saw particularly exceptional growth in new orders.  As compared to 2014 -the last time there was strong growth in new orders- the average 2017 reading was 2-points higher.

Backlog readings closed the year in expansionary territory with a reading above 53. Index readings above 50 indicate growth while reads below 50 indicate contraction.  For each month in the calendar year, backlog readings exceeded 50, a feat not previously achieved in the history of the index.  Gardner Intelligence closely monitors backlog readings as they are considered a bellwether to capacity utilization and ultimately machine tool sales.

Exports: December marked the second time this year that exports achieved an expansionary reading.  At the start of the year exports signaled modest contraction and slowly improved from there, moving toward readings of no-change in the second and third quarters.  By the fourth quarter, the export index recorded two months of expansion, besting backlog’s history of fourth-quarter performances. 

Overall, 2017 was an exceptional year for the GBI and its components.  Exceptional new order and production readings, the consistent expansion of backlog and improving performance in exports suggests that the manufacturing industry will start off 2018 on very strong footing.

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

In addition to the overall durable goods index, we compute indices for several technologies or processes. In December, Additive Manufacturing was the fastest growing technology. It was followed by Production Machining, Metalworking, Automotive, Composites, Plastics Technology, Moldmaking and Finishing.