After a month of growth in October, the November Composites Business Index of 49.1 showed that business activity had contracted at a modest rate. Although the CBI had indicated contraction in five of the previous six months, business conditions had improved compared to November 2012. In each of the three preceding months, the CBI had been higher — in November, 11.6 percent higher — than it was one year ago.
New orders and production moved from strong growth in October to slight contraction in November. Backlogs continued to contract but did so at their slowest rate since March 2013. Employment had expanded at a relatively constant rate for five months. Exports remained in contraction due to the relatively strong dollar. Supplier deliveries continued to lengthen but more slowly than in early 2013.
A materials prices increase over four months moderated, and prices received by fabricators decreased for the first time in three months. This combination put pressure on profits. Future business expectations fell slightly from the October level, but were still at their second highest level since May 2012.
Facilities with 50+ employees expanded as they had for most of 2013, and those with 20 to 49 employees showed their first growth since March, but the smallest facilities had contracted every month.
Regionally, the Pacific grew for the second month in a row and at its fastest rate in November. The only other growth was in the South Atlantic. The Mountain, East North Central, and Middle Atlantic regions contracted after expanding in October. The West North Central contracted for the fourth consecutive month.
Future capital spending plans, however, were up significantly, and at their fastest rate in three months, in November. Future spending plans were up 54.1 percent compared to one year ago. The annual rate of change increased 11.0 percent in November.
The December CBI, 51.3, showed that composites business activity was improving again, for the second time in three months. In fact, conditions at composite fabricators had improved generally since July 2013 — December’s CBI was 18.8 percent higher than in December 2012.
New orders grew at a significant rate for the second time in three months. However, production contracted at a modest rate for the second straight month. As a result, the backlog index had improved dramatically since August 2013, indicating that capacity utilization at composite fabricators will improve in 2014. Employment had grown at an increasing rate since June 2013. Exports continued to contract but the rate had slowed steadily since December 2012. Supplier deliveries continued to lengthen at a relatively constant rate.
Material prices were increasing, but the rate of increase in the previous four months was slower than in early 2013. Prices received increased four of the five previous months, but the rate of increase was much slower than the rate of increase in material prices. Future business expectations continued an upswing begun in November 2012, and reached their highest level since March 2012.
Facilities with 50+ employees expanded, as they had for most of 2013. In November, fabricators with 20 to 49 employees had grown for the first time since March 2013, but contracted again in December. Facilities 19 or fewer employees continued to contract, but the rate of contraction had slowed for three months.
The Pacific region grew the fastest in December and had done so at a faster rate each month for three months. The West South Central grew at the second fastest rate. The only other regional growth was in the East North Central, for the second time in three months. The Mountain region was flat. All other regions contracted.