Industry Remains in Throes of Supply Chain Challenges
Slowing New Orders and Production Have Little Effect on Backlogs
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The Gardner Business Index (GBI): Finishing held steady at 57.9 in October. Quickening expansion in backlog and employment activity was offset by slowing expansion in production and total new orders. New orders activity was pulled lower by a third sequential month of contracting export orders activity. Supplier deliveries activity—a measure of supply chain performance—registered its 7th consecutive month above a reading of ‘80’, extending the unprecedented logistics challenges facing finishers.
Despite October reporting the slowest expansion in total new orders activity thus far in the calendar year, backlog levels expanded, providing further evidence that the finishing industry’s greatest challenge is almost certainly rooted in its supply chain. During the Products Finishing Top Shops event in October, Gardner Intelligence heard directly from many finishers about both material shortages as well as long delays in acquiring critical goods necessary to maintain production levels. Such anecdotal stories are copacetic with the fact that production activity in the three months ending with October was little changed while backlogs levels aggressively expanded.
Products Finishing Index
The Products Finishing Index repeated its September reading, signaling a constant level of expansion in total activity across both months.
Photo Credit: Gardner Intelligence
Employment and Supply Chain Challenges Weaken Production
Finishers reported accelerating expansion in employment activity for the first time since July. Improving employment levels may enable finishers to increase production activity in the near-term and even begin resolving some of the industry’s backlog challenges.
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