Gardner Business Index: October 2016

Business expectations remain at the highest level since July 2015.
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With a reading of 46.7, the Gardner Business Index showed that the finishing industry contracted for the 16th consecutive month. The general trend of the index from November 2015 to June 2016 was up. While the index dipped in July, it recovered somewhat in August and has been virtually the same since.

New orders contracted for the 16th straight month. They have contracted faster each of the last two months. Production contracted for the first time since July, and the backlog index has contracted since June 2014. The index dropped significantly in July, but recovered somewhat the last three months. Employment has contracted for four consecutive months. Exports continued to contract, but at a slower rate in October, and supplier deliveries have lengthened every month but one since March.

Material prices have increased since February, however, the rate of increase in prices peaked in July and has decelerated considerably. Prices received contracted for the third time in five months. The future business expectations index was virtually unchanged in October, remaining at its highest level since July 2015.

A significant reason for the industry’s poor performance was that the forming/fabricating industry has contracted, starting in June 2015, but it does appear that the forming/fabricating index has recovered somewhat since July. The automotive index improved noticeably in October, growing for just the second time since September 2015. The aerospace industry has contracted in three of the last four months.





The West region was the only region to experience growth in October, its index being the highest it has ever been in the last two years. The Southeast was flat after growing every month but two since November 2015. The North Central-East and North Central-West has mostly contracted for the last 12-15 months with the trend in their indices relatively flat. The Northeast contracted at its fastest rate in at least the last two years. The South Central has improved dramatically since June but is still contracting. 

Plants with more than 250 employees grew slightly in October for the first time since June. Facilities with 100-249 employees have contracted seven out of 10 months in 2016. Companies with 50-99 employees expanded in four of the last six months. Finishers with 20-49 employees contracted for the fourth month in a row. Finishers with fewer than 20 employees have contracted since June 2015, but seemed to bottom in December 2015.  



Originally published in the December 2016 issue.