March GBI at 52.2 – Virtually Fastest Growth since June 2014

With a reading of 52.2, the Gardner Business Index showed that durable goods manufacturing grew for the 15^th consecutive month and for the 17^h time in the last 18 months. The index increased from last month and was growing at virtually its fastest rate since June 2014. However, compared with one year ago, the index contracted by 7.4%. This was the third straight month of month-over-month contraction. Annually, the index was still growing in March, but the rate of growth has decelerated since September 2014.

New orders increase for the 18^th month in a row. Since September 2014, the new orders index has steadily increased, indicating accelerating growth in new orders. Production expanded for the 15^th consecutive month. It has been particularly strong in two of the last three months. Backlogs contracted for the 12^th straight month. Over that time, the backlog index has trended steadily downward. Backlogs were 14.0% lower than they were one year, which was the fastest rate of contraction since April 2013. Backlogs are clearly indicating that growth in capacity utilization should decelerate. Employment increased for the 19^th month in a row. March had the fastest rate of growth in employment since June 2014. Exports continued to contract at virtually their fastest rate in two years due to the relatively strong dollar. Supplier deliveries lengthened at a similar rate as they have over the last 14 months. Material prices continued to increase at a significantly slower rate, as they have since October 2014. Prices received have been virtually unchanged the last two months. Future business expectations were basically unchanged from last month and remain reasonably strong.

Facilities with 100-249 and 20-49 employees saw significantly improved business conditions in March. All other plant sizes saw almost no change in their index. Plants with 19 or fewer employees have contracted for all but three months since April 2012.

Five of the six regions grew in March. The West was the fastest growing region for the second month in a row. It was closely followed by the Northeast, North Central – East, North Central – West, and Southeast regions. The South Central region contracted for the fourth month in a row.

Industrial motors/hydraulics/mechanical components was the fastest growing industry in March. This industry along with automotive and petrochemical processors had indices above 58.4 in March. Other expanding industries included medical, pumps/valves/plumbing products, primary metals, machinery/equipment, custom processors, electronics/computers/telecommunication, and metalcutting job shops. Forming/fabricating (non-auto) and aerospace contracted this month.

In addition to the overall durable goods index, we compute indices for a number of technologies or processes. The screw machining industry grew at the fastest rate this month. It was followed by metalworking, composites, plastics and finishing. Only moldmaking contracted this month.

Planned capital expenditures contracted month-over-month for the seventh straight month and the eighth time in nine months. The month-over-month rate of contraction was the fastest since the index began in December 2011. The annual rate of change has contracted at an accelerating rate each of the last five months.