GBI: Finishing Index Sets Another High in October

The Finishing Index reported a third consecutive month of expanding activity. Removing the inflationary influence of supplier deliveries from the Finishing Index would have resulted in a less expansionary reading of 53.8.

The Gardner Business Index (GBI): Finishing established several new records in October as it finished the month at 54.5. The last time the Index posted a reading at this level or higher was two years ago in the fourth quarter of 2018. Readings above “50” signal an expansion in economic activity compared to the prior month; the higher a reading is above 50, the greater the proportion of respondents reported expanding business activity. Four of the six components which constitute the index reported expanding conditions, only exports and backlogs contracted during the month. 

Not since the first quarter of 2018 have both production and new orders readings exceeded that of supplier deliveries. Strengthening domestic order demand has offset weak foreign demand.

October’s most notable event was the expansion of new orders and production activity above that of supplier deliveries. Since COVID was first classified as a national pandemic in March, disruptions to supply chains have resulted in lengthening delivery times of intermediate goods to finishers. This has both elevated supplier delivery readings -which are measured as a function of order-to-fulfillment times- and restricted production activity. The last time that new orders and production activity readings both surpassed supplier deliveries was at the start of 2018, during the peak of the last business cycle expansion for the finishing industry.