GBI for August: 48.8

With a reading of 48.8, the Gardner Business Index improved slightly in September. While the index showed that durable goods manufacturing continued to contract, the index was at its second highest level since July 2015. It does appear that since October 2015 that durable goods manufacturing has been on an upward trend.

New orders contracted again after just one month of growth. The production index increased for the second month in a row, but the rate of growth was slower in September than in August. The backlog index continued to contract but has improved somewhat the last few months. Employment has contracted every month but one since August 2015, but the rate of contraction was relatively slow the last two months. The exports index continued to contract, and the rate of contraction has slowed since last fall. Supplier deliveries lengthened at a much faster rate in September as the index reached its highest level since February 2015.

While material prices were still increasing at a significant, the rate of increase has slowed the last three months. Prices received were virtually unchanged in September. Although technically still contracting, the index has generally trended up since November 2015. Future business expectations have improved notably the last two months. The index was at its second highest level since April 2015.

Plants with more than 250 employees contracted for the third time in four months. Facilities with 100-249 employees expanded for the first time since December 2015. Facilities with 50-99 employees expanded for the fourth time in five months. Companies with 20-49 employees contracted for the sixth month in a row. Companies with 1-19 employees have contracted since June 2015.

Like last month, three of the six regions expanded in September. The Southeast was the best performing region for the third month in a row. And, the North Central-East grew for the second month in a row. The West expanded in September, which replaced the South Central which grew last month but returned to contraction this month.

Like last month, ten industries grew in September. The oil/gas-field/mining machinery industry grew at the fastest rate. This was its first month of growth since October 2015. It was followed by ship building, hardware, HVAC, furniture, custom processors, machinery/equipment, plastics/rubber products, off-road/construction machinery, and electronics/computers/telecommunications. All other industries contracted. From slowest to fastest contraction, they were metalcutting job shops, other manufacturing, petrochemical processors, primary metals, forming/fabricating (non-auto), aerospace, automotive, medical, military, pumps/valves/plumbing products, power generation, and industrial motors/hydraulics/mechanical components.

In addition to the overall durable goods index, we compute indices for a number of technologies or processes. Moldmaking and composites grew in August. Plastics, precision machining, metalworking, and finishing all contracted.

In this month’s survey, we changed how we asking about future capital spending plans. The change was to give respondents the option of selecting zero for future spending plans instead of a range from $0 to $125,000. So, we cannot really compare this month’s value to previous months.