Economic News Blog
Posted by: Steven Kline, Jr. 1. October 2014

September GBI at 50.9 – Slowing Growth Since March

With a reading of 50.9, the Gardner Business Index showed that durable goods manufacturing grew for the ninth consecutive month and for the 11th time in the last 12 months. However, the rate of growth has been slowing since March. The index was 5.4% higher this September than it was in September 2013. This was the slowest rate of month-over-month growth since September 2013. The annual rate of growth remained unchanged, which made the September the first month in 2014 that the annual rate of growth did not accelerate.

New orders grew for the 12th month in a row, but the index is at its lowest level since September 2013. Although production expanded for the ninth month in a row, the index has been falling since March. Backlogs contracted for the sixth month in a row and were contracting at their fastest rate of 2014. However, the backlog index was 7.1% higher than it was last September. The annual rate of change in backlogs dipped slightly from last month but was still quite strong. Employment has increased for 13 straight months. Exports contracted for the fifth consecutive month due to the relative strengthening of the dollar. Supplier deliveries continued to lengthen at a slightly increasing rate, a trend that’s been in place since June 2013. Material prices continue to increase at a significant rate, but the rate of increase has slowed for three straight months. Prices received have increased for five months in a row, which is the longest stretch of price increases since the summer of 2012. After falling significantly the last two months, future business expectations improved in September.

Larger facilities continued to see better business conditions than smaller facilities in September. Plants with more than 100 employees recorded their highest index since the spring of 2014. And, plants with 50-99 employees continued to see solid growth. Facilities with 20-49 employees contracted for the first time since October 2013 as their index fell to 46.5 in September from 54.8 in August. Facilities with 19 employees or less contracted at their fastest rate since August 2013.

For the fourth month in a row, the South Central grew at the fastest rate. Its index has been at or above 59.0 each of those months. It was followed by the Southeast, West, and North Central – East. Both the North Central – West and the Northeast contracted for the first time in 2014.

All of the following industries had an index above 55.0: electronics/computers/telecommunications, aerospace, forming/fabricating (non-auto), medical, machinery/equipment, and pumps/valves/plumbing products. The automotive also grew at a decent rate in September. The following industries had an index below 46.5: metalcutting job shops, custom processors, industrial motors/hydraulics/mechanical components, and plastic/rubber products.

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 September with an index of 52.5. It was followed by the, metalworking, screw machining, and composites. The finishing contracted slightly while the moldmaking industry contracted at its fastest rate since December 2012.

Planned capital expenditures decreased 8.8% compared to last September. This was the second time in three months that the month-over-month rate of change contracted. Annually, future capital spending plans were still increasing but the rate of increase continues to decelerate.


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