By The Numbers: September Index at 49.7

With a reading of 51.7, the Gardner Business Index showed that the finishing industry contracted for the first time since 2013. While the index had been quite strong from March to June, it has fallen sharply the last three months. Despite the decline, the index was still higher than it was one year ago by 2.9 percent. The month-over-month rate of change has grown since November 2013. The annual rate of change has accelerated since March. So, the industry is still improving year over year.

New orders contracted for the first time since September 2013. The new orders index has been on a down trend since March 2014. Production grew for the ninth straight month. However, the production index has fallen noticeably since May. Backlogs contracted for the third month in a row. The rate of contraction has been relatively stable during that time. Despite the falling index, the month-over-month rate of change in backlogs continued to grow. And, the annual rate of change continued to accelerate. This indicates that capacity utilization and capital investment should increase in 2015. Employment continued to expand in September, and the rate of expansion has improved slightly the last two months. Exports have contracted for three months although the rate of contraction stabilized this month. Supplier deliveries have lengthened at a consistent rate since June.

Material prices continued to increase, but the rate of increase slowed significantly since its peak in June. Prices received by finishers contracted for the first time since November 2013. Future business expectations rebounded noticeably in September and were near their highest levels of 2014.

Facilities with more than 250 employees had significant expansion in September. They improved significantly, reaching almost the highest level of 2014. Plants with 50-249 employees had more moderate growth. Smaller facilities continued to struggle though. Shops with 20-49 employees contracted for the first time since November 2013. Their index dropped to 46.7 in September from 57.3 in August. Finishing shops with 1-19 employees continued to contract as they have since August 2012.

The South Central grew at by far the fastest rate in September. The Southeast grew at a moderate rate for the second month in a row. And, the North Central – West continued to grow, but the rate of growth has slowed each of the last four months. The North Central – East and Northeast regions contracted a relatively moderate rate while the West contracted at its fastest rate since September 2013.

Future capital spending plans contracted month-over-month for the second time in three months. The annual rate of change has grown at a faster rate of change the last two months, but it will likely change directions in the next couple of months.