Finishing Index Hits Breakout Territory
Growing production and supplier deliveries can’t slow the backlogs piling up.
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All Finishing Index components increased during March, with several setting multi-year-record highs. Only exports did not reach a multi-year high during the month.
Despite very strong growth in production and supplier deliveries, backlogs increased at their fastest rate in recorded history. Finishing activity and business conditions reported through the first quarter of the year suggest that 2018 will be a very strong year for the finishing industry.
Registering 62.1 for March, the Gardner Business Index (GBI): Finishing completed its fourth consecutive month of strengthening acceleration, reaching well above its historical norms. The latest reading is the index’s second record high in as many months, and it is 11.8 percent higher than it was in the same month one year earlier.
Data is derived from a monthly survey of finishing shop owners and managers. Gardner Intelligence’s review of the underlying data for March reveals that new orders, production, supplier deliveries and backlogs lifted the index higher. Conversely, the index, which is based on an averages calculation, fell on employment and exports readings.
No single component of the index contracted during the month. In fact, March was a blockbuster month, as every component strongly increased from its prior-month reading. Production expanded only slightly faster than new orders, however, this was not enough to slow backlogs, which grew faster in March than at any time since at least 2012. The first quarter of 2018 has also seen a very significant ramp-up in supplier deliveries, which may help with strong production growth in future months. In addition, both employment and exports increased strongly during the month, although, relative to the other component measures, they simply grew less quickly.
