CW Business Index at 44.8 – Contraction continues in October

Steve Kline, Jr., the director of market intelligence for Gardner Business Media Inc. (Cincinnati, OH, US), the publisher of CompositesWorld magazine, reviews the CompositesWorld Business Index through October 2015.

With a reading of 44.8, the CompositesWorld Business Index showed that the composites industry in the United States had contracted in October for the sixth time in a seven-month period. The rate of contraction was virtually unchanged from that recorded in September. 

The new orders subindex contracted for the fourth month in a row, but that subindex did improve slightly as it had in September, after having dropped significantly in August. The production subindex, in October, had contracted four months in a row as well. However, it continued to contract at a faster rate, and in October, fell to its lowest level since December 2012. Because the production subindex has generally made a stronger showing  than the new orders subindex, the backlog subindex has also contracted throughout 2015. Backlogs in the US did rebound somewhat in September and October. However, the overall trend in backlogs indicated falling capacity utilization among composites fabricators. The employment subindex also contracted, for the third month in a row. But employment contracted at a slightly slower rate in October. Exports continued to contract because of the strength of the US dollar against other currencies during the past year. Coming in to October, the exports subindex had shown contraction at a generally accelerating rate throughout 2015. Supplier deliveries had lengthened every month since the survey had begun. They lengthened at a slightly faster rate during October and the four preceding months.

Materials prices in the US increased at a significantly slower rate during August, September and October. The materials prices subindex, in fact, was at its lowest level in October since July 2012. Prices received decreased for the first time since May. However, they had been mostly unchanged since that time. The future business expectations subindex for the US composites industry, however, improved noticeably in October for the first time since June. 

US composites production plants with more than 250 employees expanded for the second month in a row in October. Facilities with 100-249 employees grew for the first time since July. Facilities with 50-99 employees had an subindex below 40 for the second month in a row. Companies with 20-49 employees contracted for the fourth straight month, but the subindex was at its highest level in those four months. Companies with fewer than 20 employees had contracted since March.

The North Central-West was the only US region to expand in October. Its index jumped to 60.9 from 44.2, ending two months of contraction. The West and North Central-East had contracted for four months in a row. Both the Northeast and the South Central had an subindex below 40 in October.

Future capital spending plans improved somewhat from September but were still nearly 50% below average. Compared with one year previously, they were down 38% in October. 

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