With a reading of 45.7, the Gardner Business Index showed that the moldmaking industry contracted in December for the seventh month in a row. While the index had improved notably from October to November, it took a bit of a dip again in December, returning to about its September level.
New orders contracted for the sixth month in a row, but this index still reached its highest level since June 2015. Production also contracted after increasing in November. The backlog index remained mired in contraction, remaining below 40 in five of the previous six months. This indicates that capacity utilization in the industry likely will continue to fall through at least the first half of 2016. Employment contracted in December for the first time since June 2015. Because of the strong dollar, exports continued to contract as well, although the rate of contraction has improved slightly since June. Supplier deliveries shortened in the month for the second time since August.
The material prices index contracted for the fifth month in a row, reflecting the fall in almost all commodity prices due to the weak global economy. Prices received contracted for the third month in a row, however, the rate of the decrease in November and December was relatively modest. Future business expectations have improved significantly in the last two months of 2015, reaching their highest level since May.
The index for companies with more than 250 employees had grown significantly since July but contracted in December. Plants with 100-249 employees grew for the second month in a row and the third time in the previous five months. Facilities with 50-99 employees grew at their second fastest rate since March 2014, while companies with 20-49 employees contracted at their fastest rate since the survey began in December 2011. Finally, companies with fewer than 20 employees posted an index below 40 for the second time in the last three months of the year.
Custom processors contracted for the sixth month in a row to their lowest level since December 2013. Meanwhile, metalcutting job shops contracted for the seventh time in eight months, although their index improved in both November and December.
The Southeast grew at the fastest rate by far in December for the second month in a row. In fact, it was the only region to expand in the month. The North Central-West, North Central-East, South Central and Northeast regions all posted indexes in the mid-40s. The West contracted at the fastest rate, with its index falling below 40 for the second time in the last five months of the year.
For the first time since October 2014, future capital spending plans increased compared with one year earlier, and the annual rate of change contracted at a slower rate for the first time. It could be that future capital spending plans have reached a bottom and have started to improve.