With a reading of 51.7, the Finishing Business Index showed that the finishing industry grew in August for the eighth consecutive month, up slightly from July. Compared to last August, the index increased 14.4 percent. That was the second fastest rate of month-over-month growth since November 2013. Annually, the finishing industry has grown at an accelerating rate each of the previous six months.
New orders and production both grew for the eighth month in a row as well, and both at a faster rate than in July. Backlogs contracted for the second month in a row, however the backlog index in August was almost 17 percent higher than it was a year earlier. Annually, backlogs have been growing at an accelerating rate for seven months, indicating that capacity utilization and capital investment should increase in 2015. Employment continued to expand in August, but it did so at the slowest rate this year. Exports have contracted at an accelerating rate the last two months, while supplier deliveries lengthened at one of the fastest rates of the last two years.
Material prices continued to increase at a relatively high rate, however the rate of increase has slowed the last two months. Prices received were flat in August after two months of fairly strong price increases by finishers. Future business expectations have fallen somewhat the last two months. The index is at its lowest level of the year, but it is still substantially above the levels seen in most of 2012 and 2013.
Growth at larger finishing facilities, those with more than 100 employees, slowed noticeably in July and August, and this is the main reason the overall index has fallen to its lowest levels of 2014. Finishers with 50-99 employees expanded modestly in August after contracting in July. Shops with 20-49 employees continued to see robust expansion, while finishers with 19 employees or less continued to contract, although at the slowest rate in three months.
Three of the five regions expanded in August. The fastest growing region, the Southeast, was actually the worst performing region in July. The Northeast grew at a slightly slower rate, and the North Central-West continued to expand, but at its slowest rate of the year. The North Central–East contracted for the first time in three months, and the West contracted for the second month in a row.
While they contracted in July, future capital spending plans increased by almost 24 percent compared to last August. The annual rate of change had been contracting or flat since at least November 2013, but in August it grew substantially for the first time.