Gardner Business Index: September 2016

Future business expectations increased, reaching highest level since July 2015.


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With a reading of 46.0, the Gardner Business Index showed that the finishing industry contracted for the 15th consecutive month. The general trend of the index from November 2015 to June 2016 was up, but the index seemed to roll over in June and has trended down since.

New orders contracted for the 15th straight month. The rate of contraction in September was relatively slow but faster than August. Last month, the production index increased for the first time since November 2015. In September, the production index was flat and the backlog index continued to contract. While the index was improving between November 2015 and June 2016, it has dropped significantly since.

Employment contracted for the third month in a row after two months of expansion. Exports continued to contract as the rate of contraction accelerated notably the last three months. Supplier deliveries lengthened for the sixth time in seven months.

Material prices continued to increase at a rapid rate. The index dipped below 60 for the second month in a row, yet material prices continued to increase at their fastest rate since late 2014. Fortunately for finishers, prices received increased for the second month in a row, which has increased in six of the last eight months. The future business expectations increased substantially in September, reaching its highest level since July 2015.

One reason the overall index has been weak is that the most important industries for finishers have struggled. Amongst finishers, the automotive index has contracted every month but one since September 2015. Forming/fabricating (non-automotive) has contracted since June 2015 and electronics has contracted two months in a row. 

On the positive side, the aerospace index expanded in September for the third time in five months.
In this month’s survey, we changed how we asked about future capital spending plans. The change was to give respondents the option of selecting “zero” for future spending plans instead of a range from $0 to $125,000. So, we cannot accurately compare this month’s value to previous months, but we expect to have even more accurate readings in months to come.  



Originally published in the November 2016 issue.