With a reading of 48.9, the Gardner Business Intelligence Finishing Index shows that the industry contracted for the 18th consecutive month in December. However, the index was virtually unchanged from last month, meaning the index remained near its highest point since July 2015. The index has continued to show consistent improvement since July 2016.
New orders also contracted 18 months in a row. While the index has pushed up against the 50-point mark several times, it has not moved over into full growth. Production contracted for the second time in three months. Since August, the index was generally higher than any time since early 2015, which was the last period of sustained growth in production. The backlog index remained in contraction and noticeably below 50. Employment increased for the second month in a row. Exports just barely contracted as the index reached its highest level since December 2014 and the index has improved dramatically since September 2016. Supplier deliveries have lengthened at a consistent rate for four months.
The material prices index has jumped sharply two months in row. In December, material prices increased at the fastest rate since June 2014. Fortunately, prices received increased this month for the first time since October and at the fastest rate since January 2014. After a huge surge in November, presumably due to the proximity of the presidential election, future business expectations increased again in December, setting a record high for the second month in a row.
The automotive index increased for a second time in three months. In December, the index hit its highest level since March 2015. Aerospace remained strong as the index grew for the third time in four months. Perhaps the most important indication this month, the forming/fabricating index increased for the first time since June 2015.
The Southeast was the fastest growing region for the second month in a row and has continued to grow at an extremely strong rate in three of the last four months. The South Central region expanded for the first time since February 2016.
Plants with more than 250 employees contracted after two months of growth. Facilities with 100-249 employees grew for the first time since August 2016. Companies with 50-99 employees expanded for the fourth time in five months while smaller finishing shops continued to contract.
Originally published in the February 2017 issue.
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