Gardner Business Index May 2016—48.5


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With a reading of 48.5, the Gardner Business Index showed that the finishing industry contracted for the 11th consecutive month. However, the index has improved steadily since October 2015 and reached its highest level since May 2015.

New orders contracted for the 11th month in a row. In three of the last five months, the new orders index was virtually flat. The production index contracted for the sixth month in a row. The backlog index remained mired in contraction. However, the index has improved significantly since October 2015. In May, the backlog index was at its highest level since February 2015. Employment increased for the first time since September 2015. Exports continued to contract, but at a slower rate since October 2015. Supplier deliveries lengthened at an accelerating rate for the third month in a row. 

The material prices index has skyrocketed since January. The rate of increase was the fastest since July 2014 and one of the fastest on record. Prices received increased for the fourth month in a row and at the fastest rate in the last 12 months. Future business expectations declined for the second month in a row and were near their lowest level in the last two years.

Plants with more than 250 employees contracted for the third time in four months. Facilities with 100–249 employees contracted for the fourth month in a row. Companies with 50–99 employees expanded for the second time in three months. In May, their index was 62.2, which was the fastest rate of growth since the survey began in December 2011. Finishers with 20–49 employees contracted for the second month in a row while those with fewer than 20 continued to contract.

The Southeast was the fastest growing region for the second time in three months, expanding five months in a row and growing at its fastest rate since November. The North Central-East and West regions had more modest growth. The Northeast, North-Central West, and South Central regions contracted. The South Central’s index was below 40 for the second month in a row.

Future capital spending plans reached their highest level since October 2014. For the second month in a row, spending plans were quite close to their historical average. Compared with one year ago, spending plans increased 42 percent in May, which was the fifth increase in seven months—a clear sign that the industry is entering its next capital equipment expansion.