Economic News Blog
Posted by: Steven Kline, Jr. 5. January 2016

GBI for December: 43.8

With a reading of 43.8, the Gardner Business Index showed that durable goods manufacturing industry contracted for the ninth month in a row. The index has been virtually unchanged since October.

New orders contracted for the ninth consecutive month, but the rate of contraction has moderated in recent months. Production continued to contract, but it too has flattened in recent months. The backlog index continued to contract. It did improve compared with November, but the trend since January is one of accelerating contraction. This indicates falling capacity utilization over the next six months at least. Employment contracted for the fifth, and the index was nearly its lowest level since the survey began in December 2011. Exports remained mired in contraction due to the strength of the dollar, but there has been some slight improvement the last two months. Supplier deliveries shortened for the second month in a row, indicating that there is slack in the supply chain.

Material prices contracted for the fifth month in a row. This reflects the decline in commodity prices worldwide because of slower global growth. Prices received decreased for the seventh consecutive month. The index did improve from its lowest level ever in November. Future business expectations improved for the first time since July 2015 but are still relatively low.

Plants with more than 250 employees contracted for the first time since August. But, facilities with 100-249 employees expanded for the first time since June. This was the only size range to grow in December. Facilities with 50-99 employees contracted for the fifth month but had their best index of those five months. Companies with 20-49 employees had their lowest index since December 2012. Companies with 1-19 employees continued had an index below 40 for the first time since survey began in December 2011.

In December, every region contracted for the fifth month in a row. The Southeast was the best performing region for the second month in a row. The West, North Central-East, North Central-West, and Northeast all contracted at a similar rate. The index for the South Central was below 40 for the fifth consecutive month.

Of the industries with significant response, industrial motors/hydraulics/mechanical components was the fastest growing in December. Also growing, but with limited response, were HVAC, shipbuilding, and furniture. All other industries contracted. From slowest to fastest contraction, they were: electronics/computers/telecommunications, plastics/rubber products, machinery/equipment, petrochemical processors, medical, primary metals, aerospace, other manufacturing, forming/fabricating (non-auto), automotive, custom processors, off-road/construction machinery, hardware, metalcutting job shops, oil/gas-field/mining machinery, pumps/valves/plumbing products, power generation, and military.

In addition to the overall durable goods index, we compute indices for a number of technologies or processes. All technologies contracted for the sixth month in a row. From slowest to fastest contraction, the technologies were moldmaking, finishing, metalworking, plastics, composites, and precision machining.

Planned capital expenditures for the next 12 months remained below their historical average, but compared with one year ago they have contracted at a slower rate for three straight months.


Comments are reviewed by moderators before they appear to ensure they meet Gardner Business Media’s submission guidelines.
blog comments powered by Disqus