October Index at 53.0 – Fastest Growth Since June

With a reading of 53.0, the Gardner Business Index showed that the finishing industry grew in October for the ninth time in 10 months and to its highest level since June; in the one month during that span that it did not grow, the industry was flat. Compared to one year earlier, the October index increased by 5.2 percent. The annual rate of change has been about 9.5 percent for three straight months.

New orders made a huge jump in October after contracting in September and are growing at their fastest rate since May. Production has grown every month this year, and in October the rate of expansion increased to its fastest since May. Backlogs contracted for the fourth month in a row to just below 50.0, but the month-over-month rate of change continued to grow and the annual rate of change remained near its peak rate of growth. This indicates that capacity utilization and capital investment should increase in 2015. After significantly slower growth in July, employment has expanded at an accelerating rate in the three months since. Exports have contracted for four months due to the rising dollar, and supplier deliveries have lengthened at a consistent rate since June.

Material prices continued to increase, but the rate of increase has been somewhat slower since its peak in June. Prices received by finishers increased at their fastest rate since January. Future business expectations dipped slightly from September but have been at a fairly consistent level throughout 2014.

Larger facilities saw slower growth in October than in September, and the slower growth was more noticeable in facilities with more than 250 employees than in plants with 100-249 employees. This was more than made up for by improved business conditions at smaller finishers, however. Shops with 50-99 employees expanded at their fastest rate in the history of the index, and facilities with 20-49 employees also expanded after contracting in September. Shops with fewer than 20 employees contracted at their slowest rate since April.

The North Central–West grew at the fastest rate in October, followed closely by the North Central–East, which grew for the first time since July. The Southeast grew for the third straight month, while the West contracted for the fourth month in a row. The Northeast contracted for the first time in 2014.

After contracting last month, future capital spending plans increased 2.5 percent compared to last October. The annual rate of growth continued to accelerate and was growing at its fastest rate in the history of the index.