GBI: Finishing for March 2016—48.4
With a reading of 48.4, the index shows continued improvement since October.
With a reading of 48.4, the Gardner Business Index showed that the finishing industry contracted for the ninth consecutive month. However, the index has improved noticeably since October. In March, the index was at its highest level since June 2015, which was the last time the index showed growth in the finishing industry. Every sub-index, except exports, contributed to the improvement of the total index in March.
New orders contracted for the ninth month in a row. In two of the last three months, the new orders index was virtually flat, and the production index contracted for the fourth month in a row, though the index has improved consistently the last three months. While still contracting, the backlog index has improved significantly since October. In March, the backlog index was at its highest level since February 2015. Employment was unchanged for the second time in four months. Exports continued to contract, but the rate of contraction has slowed. Supplier deliveries lengthened for the first time since November, indicating that activity throughout the supply chain was picking up.
Material prices increased for the first time since July, and the index increased sharply for the second month in a row. Prices received increased for the second month in a row. While future business expectations had improved steadily the previous months, the index increased significantly in March, reaching its highest level since July.
Plants with more than 250 employees expanded once again after a single month of contraction, while facilities with 100–249 employees contracted for the second month in a row. Companies with 50–99 employees grew for just the second time since June, with March being the fastest rate of growth since January 2015. Finishers with 20–49 employees expanded for the second month in a row, while finishers with fewer than 20 employees continued to contract, but had their highest index since June 2015.
The Southeast was the strongest region for the fourth time in the last five months, growing at a strong rate in each of those months. The Northeast and West regions expanded in March too. The North Central-West, South Central and North Central-East have contracted for most of the last year.
Future capital spending plans fell to the lowest level since October. Compared with one year ago, spending plans were down 15.6 percent. But, recent spending plans have improved enough that the annual rate of change has contracted at a decelerating rate since October, indicating that capital spending at finishing facilities is in the early stages of a recovery.
Originally published in the May 2016 issue.
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