GBI for November: 43.9
With a reading of 43.9, the Gardner Business Index showed that durable goods manufacturing industry contracted for the eighth month in a row. The index improved from the previous month, but it is down significantly compared with one year ago.
New orders contracted for the eighth consecutive month, but the rate of contraction has moderated in recent months. Production continued to contract, but the index did improve noticeably in November. Because production has remained relatively stronger than new orders, the backlog index continued to contract at an accelerating rate. This indicates falling capacity utilization over the next six months. Employment contracted for the fourth but did improve compared to last month. Exports remained mired in contraction due to the strength of the dollar. Supplier deliveries shortened for the first time since the index began in December 2011, indicating that there is slack in the supply chain.
Material prices contracted for the fourth month in a row. The index dropped noticeably in November. These are the only four months of contraction since the index began in December 2011. Prices received decreased for the sixth consecutive month. In November, the prices received index was at its lowest level ever for the second month in a row. Future business expectations continue to slide and were at their lowest level since December 2012.
Only plants with more than 250 employees expanded in November. They have grown four of the last five months. Plants with 100-249 employees contracted for the fifth month in a row, but they did so at a slower rate than the previous two months. Facilities with 50-99 employees recorded their lowest index since the survey began in December 2011. Companies with 20-49 employees have had a fairly consistent contraction for five months. Companies with 1-19 employees continued to be the weakest part of manufacturing with an index just above 40 for the second month in a row.
In November, every region contracted for the fourth month in a row. The Southeast contracted at the slowest and its index did improve considerably from last month. The West, North Central-East, North Central-West, and Northeast contracted at similar rates to last month. The South Central saw its index fall to 31.6, which was significantly below any month for any region since the survey began.
The fastest growing industry in November was primary metals (hardware and HVAC grew faster but had limited response). Off-road/construction machinery and aerospace also expanded in November. All other industries contracted. From slowest to fastest contraction, they were: custom processors, medical, industrial motors/hydraulics/mechanical components, petrochemical processors, other manufacturing, automotive, plastics/rubber products, electronics/computers/telecommunications, forming/fabricating (non-auto), military, metalcutting job shops, machinery/equipment, power generation, pumps/valves/plumbing products, and oil/gas-field/mining machinery.
In addition to the overall durable goods index, we compute indices for a number of technologies or processes. All technologies contracted for the fifth month in a row. From slowest to fastest contraction, the technologies were moldmaking, finishing, plastics, composites, metalworking, and screw machining.
Planned capital expenditures for the next 12 months remained below their historical average, but they improved noticeable in November. Planned expenditures were almost 50 percent higher than the previous two months. However, compared with one year ago, planned capital spending has contracted more than 20 percent in nine of the last 11 months.
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