Index sees gradual start to 2019 on slow new orders growth
The Composites Business Index moved lower in the first month of 2019, with slowed growth in new orders.
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Twenty-five consecutive months of expansion
A surprise jump in production growth combined with ongoing supplier delivery expansion were key supports in the Index’s 25th consecutive month of expansion, the longest in recorded history.
January’s strong production increase interrupts backlog’s growth trend
A relatively greater expansion in production than new orders at the start of 2019 resulted in a significant contraction in the Index’s backlog component. Slowing expansion in supplier deliveries gave way to production as the fastest expanding component of the Index in January.
The January GBI: Composites Index moved lower from the prior month to 53.0. The latest reading continues a slowing growth trend in the Index first established in the second quarter of 2018. The latest reading is 9.7 percent lower compared to the same month one-year ago — near the time that the Index was headed to a new all-time high in early 2018. Gardner Intelligence’s review of the underlying data indicates that the Index was propelled higher during the month by production and supplier deliveries. The Index, calculated as an average, was pulled lower by new orders, employment, exports and backlogs. Backlogs was the only component to contract in January; the last time backlogs contracted was December 2017.
January marks only the second time in nearly a year that the reading for supplier deliveries was not the leading component of the Index. The supplier deliveries component has regularly been the fastest growing component of the Index since early 2018 when new orders and production readings peaked at all-time record highs. This trend suggests that the composites supply chain diligently expanded throughout 2018 in order to keep up with heightened composite orders.
According to the latest data, production expanded quickly at the start of the year while new orders growth simultaneously slowed. The combined effects of these conditions resulted in the sharpest contractionary reading in backlogs in over two years. Exports, which have experienced several recent months of contraction, did not mitigate the lower backlog reading.
More information about the Composites Fabricating Index can be found at http://www.gardnerintelligence.com/
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