With a reading of 48.9 in November, the Gardner Business Index showed that the finishing industry contracted for the 17th consecutive month. However, this was the highest level for the index since July 2015 and the index has shown consistent improvement since July 2016.
New orders also contracted for the 17th straight month, but its index has also improved significantly since July. Production was flat for the second time in three months and has increased just once since November 2015. The backlog index continued to contract but was near its highest level since February 2015. The trend in the backlog index indicated that capacity utilization at finishing shops should increase soon. Employment increased for the first time since June 2016. Exports continued to contract while supplier deliveries lengthened for the third month in a row.
Material prices increased at their fastest rate since June 2016. Since April 2016, material prices have increased faster than at any time since late 2014. Prices received contracted for the second month in a row and the fourth time in six months.
Future business expectations skyrocketed in November, jumping more than 14 points to 83.6, its highest level since the survey started in December 2011. Given the proximity of the survey to the election, it would seem reasonable to conclude that the finishing industry is bullish on President-elect Trump.
The aerospace industry was the fastest growing in November with its index increasing for the second time in three months. Both the machinery/equipment index and electronics index grew for the first time since July 2016. The automotive index was flat after growing in October but metalcutting job shops grew for the first time since March 2016. The forming/fabricating index continued to contract but at its slowest rate since June 2015, which was its last month of growth.
The Southeast was the only region to grow in November. It was the fastest growing region in three of the last four months. The West contracted after growing in October. While all the other regions continued to contract, the rate of contraction decelerated across the country.
Plants with more than 250 employees grew for the second month in a row and grew at their fastest rate since November 2015. Facilities with 100-249 employees contracted for the third consecutive month. Companies with 50-99 employees contracted for the first time since July 2016 and smaller finishing shops continued to contract.
Originally published in the January 2017 issue.
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