By The Numbers: Industry Growth Remains Strong

Finishing industry accelerates for fifth consecutive month.

With a May reading of 53.5, the Gardner Business Index showed that the finishing industry grew for the fifth consecutive month. Since August 2013, the level of business activity in the finishing industry has been improving steadily. In May, the index was 8.5 percent higher than it was one year ago. This was the ninth consecutive month that the month-over-month rate of change grew. Annually, the industry has grown at an accelerating rate the last three months.

New orders and production have increased at a significantly accelerating rate the last five months. And, both have been improving steadily since August 2013. Backlogs contracted in May after increasing in April. However, backlogs increased 9.6 percent compared with one year ago. This is the third straight month of such growth. The annual rate of change has accelerated rapidly each of the last four months. This indicates higher capacity utilization levels and capital spending in the industry for the remainder of 2014. Employment continued to expand at a significant rate. Exports expanded for the second time in three months. They are increasing at their second fastest rate since the index began in December 2011. Supplier deliveries continued to lengthen, but the rate of lengthening was the slowest since the index began.

Material prices have been increasing at a generally accelerated rate since September 2013. Prices received by finishers were flat in May, although they had increased the previous five months. Future business expectations were unchanged compared with last month and remain at a strong historical level.

Finishing facilities with more than 250 employees had significantly improved business conditions in May. And, these facilities grew at their third fastest rate since the index began. Also, finishers with 50-99 employees saw dramatically improved business conditions. These facilities have grown at a strong rate four of the last five months. Growth slowed down significantly at finishing shops with 20-49 employees. In fact, they grew at their slowest rate of 2014. Finishers with 19 or fewer employees continue to see contracting business conditions.

The North Central – West region grew at the fastest rate in May, and has grown for six consecutive months. It was followed by the West and Northeast regions, both of which have grown four of the last five months. The Southeast region continued to grow in May. And, the North Central – East region expanded after contracting the previous month.

Future capital plans were above $1,000,000 for the second straight month. Compared with one year ago, capital spending plans were up 15.4 percent in May. This is the third straight month of month-over-month growth. The annual rate of change is contracting at its slowest rate since at least November 2013, indicating higher capital spending in the upcoming months.