Index Sustains Prior Month’s Expansion
The Finishing Index registered modest business activity in June, repeating May’s 51.1 reading. The latest Index reading is 13% lower compared to the same month one year ago, indicating slowing growth within the industry over the past year. (Index readings above 50 indicate expanding activity, while values below 50 indicate contracting activity. The further away a reading is from 50, the greater the magnitude of change.)
The latest Index reading was led higher by expanding activity in supplier deliveries and production. This was followed by expansionary readings in new orders and employment. The Index calculated as an average of its components was pulled lower by contracting activity in exports and backlogs.
The spread between production and new orders activity widened for another month in June, putting additional downward pressure on backlogs. While total new orders continue to expand, recent exports readings have been weak with June’s readings setting a 3-year low. Taking the combination of new orders, exports and production activity together, finishers appear to be sustaining elevated production levels (despite several recent months of weak exports) by depleting their backlogs which grew steeply during 2018.
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