Finishing Sustains Elevated Growth
Sharp expansion in supplier deliveries was the leading driver of the Finishing Index in May.
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The Finishing Index sustained its recent trend of exceptional growth in May. Although several components registered lower results when compared to readings for April, all components expanded during the month.
The spread between production and new orders widened further in May. Despite another month of relatively faster growth in production as compared to new orders, May’s data indicates that backlogs grew faster than at any prior time in recorded history.
Registering 58.2, the Gardner Business Index (GBI): Finishing for May minimally changed from the prior month, yet recorded its third-highest reading since records began. Throughout all of 2018, the index has sustained unprecedented growth, averaging a monthly reading of 58.9 in the year-to-date period. Compared to May 2017, the index is 5.5 percent higher.
Gardner Intelligence’s review of the underlying data for the month reveals that supplier deliveries grew sharply faster in May and were the leading driver of the index, which is calculated using an average-based formula. The Finishing Index was also lifted by production, while new orders, backlogs, employment and exports pulled it lower. All six components of the index reported varying levels of expansion during the month.
In a surprising move, the rate of backlog growth increased despite another month of production growth outpacing new orders growth. Year-to-date backlog readings have exceeded the historical backlog growth readings of all prior months since record keeping began in 2011. Recent and continual growth in backlogs may suggest that employment and supplier delivery readings will be significant drivers of the index moving into the second-half of 2018 as finishers continue to increase their output levels.
