Finishing Index Moves Higher on Strong Production Activity

The Finishing Index pushed higher for a second month registering 52.5. The latest Index reading is 10% 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 business activity, while a value of 50 indicates no change and a reading below 50 indicates contracting business activity.

The latest Index reading was led higher by strength in production activity followed by supplier deliveries and employment. The Index—calculated as an average of its components—was pulled lower by slowing growth in new orders, no change in exports and contracting backlog activity.

Greater production activity relative to new orders may have cut into backlog levels during April. Since late 2018, new orders activity has been relatively less expansionary than supplier deliveries and production. Backlogs expanded rapidly through the first three quarters of 2018 before turning activity began contracting, according to survey participants. Backlogs have posted contractionary readings over the last six months. These results do not imply that the industry is facing a lack of orders. Both production and new orders have indicated expanding activity for nearly thirty consecutive months. 

Finishing employment also continues to grow, which suggests that finishers have a strong outlook for the future.