November Index at 48.5

Finishing industry experiences first contraction since December 2013

With a reading of 48.5, the Gardner Business Index showed that the finishing industry contracted for the first time since December 2013. Compared to one year ago, the index decreased by 1.8 percent in November. This was the first time the month-over-month rate of change contracted since August 2013. The annual rate of growth slowed to 7.6 percent, which was the first time it fell below 9.4 percent in three months.

New orders contracted for the second time in three months. They contracted at their fastest rate since August 2013. Production has grown every month in 2014. In October, the rate of expansion increased at its slowest rate of the year. Backlogs contracted for the fifth month in a row. The backlog index fell to its lowest level since December 2013. Despite the decline, the month-over-month rate of change in backlogs continued to grow. The annual rate of growth has been in double digits since May. This indicates that capacity utilization and capital investment should increase in 2015. Employment continued to expand but at its slowest rate of the year. Exports have contracted for five months due to the rising dollar. Supplier deliveries have lengthened at a slower rate since August.

Material prices increased at a noticeably slower rate in November. The rate of increase was the slowest since September 2013. Prices received by finishers increased for the fourth time in six months. Future business expectations dipped slightly from last month. They have been trending down slightly throughout 2014.

The industry’s poorer performance in November was due to weaker business conditions at both ends of the size spectrum. Facilities with more than 250 employees contracted for the first time since October 2013. Their index fell nearly 10 points. Shops with 20-49 employees contracted for the second time in three months. And, finishers with fewer than 20 employees contracted at a faster rate than last and have contracted every month since August 2012. Finishers with 50-249 employees grew at a similar rate to last month.

In November, three regions had moderate growth—Southeast, North Central—East, and West. The North Central—West contracted for the first time since November 2013. The South Central and Northeast also contracted.

Future capital spending plans decreased 31.9 percent compared with last November. They have contracted three of the last five months. The annual rate of change continued to grow but the rate of growth fell noticeably in November.