November GBI at 51.3 – Growth Rate Remains Steady
With a reading of 51.3, the Gardner Business Index showed that durable goods manufacturing grew for the 11th consecutive month and for the 13th time in the last 14 months. The index has moved up the last two months from September, which had the lowest index since December 2013. However, the rate of growth compared to one year ago was the slowest since August 2013. The index was just 1.4% higher this November than it was in November 2013. The annual rate of growth decelerated for the second month in a row but is still at a healthy 8.5%.
New orders grew for the 14th month in a row. The rate of growth has been relatively flat since July. Production expanded for the 11th month in a row. It too has had a relatively flat rate of growth since July. Backlogs contracted for the eighth month in a row. The backlog index has trended down since March. Compared to one year ago, the backlog index contracted for the first time since August 2013. The annual rate of change in backlogs has grown at a slower rate for three months, which indicates that the rate of growth in capacity utilization should peak around the end of the first quarter in 2015. Employment has increased for 15 straight months but has seen slightly faster growth since August. Exports contracted for the seventh consecutive month due to the relative strengthening of the dollar. Supplier deliveries continued to lengthen but the rate of increase has slowed the last three months. Material prices continue to increase but the rate of increase was the slowest since December 2013. Prices received have increased for seven months in a row, which is the longest stretch of price increases since the summer of 2012. Future business expectations rebounded sharply in November. They have bounced around quite a bit the last four months.
Larger facilities saw pretty similar business conditions to last month. Plants with 20-49 employees saw slower growth. In fact, November was the slowest rate of growth for these plants since December 2013. Facilities with fewer than 20 employees continued to contract but it was the slowest rate of contraction since May, which was the last time these plants grew.
For the sixth month in a row, the South Central grew at the fastest rate. The Southeast saw significantly improved conditions and was the second fastest growing region. There was moderate growth in the North Central – East, North Central – West, and Northeast. The West saw a moderate contraction for the second month in a row.
Custom processors grew at the fastest rate in November after contracting the last two months. Primary metals was close behind and has grown significantly in the last growth. They were followed by the aerospace, automotive, machinery/equipment, and forming/fabricating (non-auto) industries. Metalcutting job shops were flat after contracting the three previous months. Plastics/rubber products continued to contract.
In addition to the overall durable goods index, we compute indices for a number of technologies or processes. The plastics industry grew at the fastest rate in November. It was followed by moldmaking, metalworking, and composites. Screw machining contracted for the second month in a row. Finishing contracted in November after it was the fastest grower last month.
Planned capital expenditures contracted month over month by more than 10% for the fourth time in five months. Annually, future capital spending plans contracted for the first time since our index began.
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