Economic News Blog
Posted by: Steven Kline, Jr. 29. November 2013

November GBI at 50.6 – Two Months of Growth

With a reading of 50.6, the Gardner Business Index shows that durable goods manufacturing grew for the second month in a row. This is the first time durable goods manufacturing has grown two consecutive months since June 2012. In November 2013, the index was 17.7% higher than it was one year ago. This was the fourth time in five months that index has higher than it was one year ago.

New orders grew for the second month in a row while production grew for the third month in a row. Production has been growing faster than new orders so backlogs are still contracting. But, backlogs are contracting at a slower rate, which means that capacity utilization at durable goods manufacturing facilities is improving. After a one month contraction in August, employment has expanded for the third consecutive month. The dollar has remained relatively strong recently, which is causing exports to contract. Supplier deliveries continue to lengthen as the manufacturing industry improves. Materials prices increased at a slower rate in November. But, prices received by manufacturers decreased for the first time since April 2013. Future business expectations continue to improve, reaching their highest level since April 2012.

Facilities with more than 50 employees continue to grow at a strong rate. Plants with more than 250 employees have grown significantly faster each of the last two months. For the first time since March 2013, plants with 20-49 employees had an index of 50.0. And, even though they continue to contract, shops with fewer than 20 employees have contracted at a significantly slower rate the last couple of months. The improving conditions at smaller facilities is one of the main reasons why the overall index has shown growth in durable goods manufacturing the last two months.

The medical grew at the fastest rate in November. Also, it has grown seven of the last eight months. Also growing in November (in order of fastest to slowest growth) were aerospace, custom processors, machinery and equipment, primary metals, automotive, and metalcutting jobs shops. Pumps, valves and plumbing products, petrochemical processors, plastics and rubber, and electronics all contracted after growing the previous month. Forming and fabricating (non-auto) contracted for the sixth straight month.

The Pacific region grew the fastest in November. It has grown faster each of the last two months. The Mountain region has grown three consecutive months, which is the longest running stretch of growth for any region. Also, growing were the South Atlantic, West South Central, East North Central, and West North Central regions. The New England, Middle Atlantic, and East South Central regions all contracted. The East South Central is the poorest performing region as it has contracted four months in a row.

Planned capital expenditures for the next 12 months reached their highest level in the history of the index, which dates back to December 2011. The average planned spending per plant in November was just over $1 million, which was nearly 20% above the historical average. Compared to November 2012, planned spending was up 96.8%. The annual rate of change of planned capital spending was up 25.7%.

In addition to the overall durable goods index, we compute indices for a number of technologies or processes. After three months of contraction, the plastics industry returned to growth. It recorded the fastest rate of growth in November. Both the moldmaking and metalworking industries grew for the second consecutive month. Finishing and composites contracted after growing last month. Production machining contracted for ninth straight month.

Also, you can find indices for the following end markets: aerospace; automotive; custom processors; electronics, computers and telecommunications; forming and fabricating (non-auto); machinery and equipment manufacturing; medical; metalcutting job shops; petrochemical processors; plastics and rubber; primary metals; and pumps, valves, and plumbing products.

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