With a reading of 45.3, the Gardner Business Index showed that the moldmaking industry contracted in September for the fourth month in a row, during which time the rate of contraction has consistently accelerated. The index generally has trended lower since February, and in September it contracted at its fastest rate since December 2012.
New orders contracted at an accelerating rate for the third month in a row, although the drop in the index flattened in August and September. In September, the new orders index was at its lowest level since December 2012. Production contracted for the third time in four months, and the drop was particularly sharp in August and September, with the index falling to its second lowest level ever. In September, the production index dropped well below the new orders index, and, as a result, the backlog index contracted at its slowest rate in three months. Employment expanded in seven of the first nine months of 2015, although the rate of increase slowed in the last two months. Because of the strong dollar, exports continued to contract in September, and, after shortening in August, supplier deliveries lengthened once again.
The material prices index contracted for the fourth time in the previous eight months, the only times it has been below 50.0. This index reflects the fall in almost all commodity prices due to the weak global economy. While material prices were falling, prices received increased for the first time since last December. Future business expectations improved from August but have moved lower overall since March.
The overall business index dropped because of the perform-ance at mid-size facilities. Companies with 50-249 employees recorded a particularly large drop in their index in September, and smaller companies with 50-99 employees had their index fall to 36.9 from 60.8. Facilities with fewer than 50 employees also continued to contract at a similar pace to August, while plants with more than 250 employees expanded in September for the second month after just a one-month contraction.
Custom processors contracted for the third month in a row and posted their lowest index since September 2014. Metalcutting job shops contracted for the fourth time in five months, although the rate of contraction was much slower in September than in August.
The West was the only region to expand in September, with an index just above 50.0 for the first time since March. From slowest to fastest contraction were the North Central-West, Southeast, North Central-East, South Central and Northeast.
Future capital spending plans remain nearly 50 percent below their average level. Compared with one year earlier, they have contracted more than 40 percent in nine of the previous 10 months.