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Composites Index reading remains unchanged from May

June’s readings remain the same as quickening supplier deliveries offset improvement in new orders and production.
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Composites Fabricating Business Index: The Composites Index was unchanged from May to June with the Index holding at 42.3.

The Composites Index was unchanged in June, maintaining its May reading of 42.3. Survey respondents reported slowing contraction in new orders, production and export activity.  An increasing proportion of respondents indicated that supplier deliveries quickened, sending that measure down 9 points and putting downward pressure on the overall index. Employment and backlog activity readings fell further below a reading of 50 in June, indicating a quickening contraction in hiring and backlog levels.

 

Index registers higher new orders and production readings and quickening supplier deliveries: Despite no change in the overall Index reading, new orders and production reported slowing declines and supplier delivery readings quickened.  These changes should be considered welcomed news for the industry.

Slowing supplier deliveries result in an elevated reading. The reason behind this has to do with the knowledge that, during a period of strong economic growth, upstream suppliers experience lengthening backlogs which cause delays to the timely delivery of their products to composite fabricators. To correlate the slowing of deliveries with a growing economy, this index component rises as supplier deliveries slow and fall when deliveries quicken.

As a result of the unprecedented disruption to the U.S. and world economies caused by COVID-19, supply chains worldwide have been forced to slow down production and deliveries, elevating the supplier delivery index, as it implies that upstream manufacturers are finding ways to move product more efficiently than just a few months ago.  It also suggests that overall conditions improved in June despite no change in the overall Index’s value.