Composites Index moves lower after setting all-time high

The GBI: Composites Fabricating Index for May registered 57.4, moving lower after having set an all-time record in April. Compared to the same month one-year ago, the Index showed an increase of 4.1%. Five of the six measures used to calculate the Index fell during the month. Only the Supplier Deliveries subindex remained unchanged, near its all-time high set earlier this year. 

May’s lower readings could suggest that the industry’s growth is merely moderating after achieving unprecedented levels of growth earlier in the calendar year. While May’s numbers were comparably lower than recent periods, all components continued to register expansionary gains (>50.0 readings) for the month.

The Gardner Intelligence team’s review of the underlying data for the month indicates that the Index was pulled strongly higher by Supplier Deliveries. The Index was also supported by Production, Employment and New Orders. But the Composites Fabricating Index — an averages-based calculation — was pulled lower by Backlogs and Exports, both of which indicated slowing growth during the month. 

The relatively stronger Production reading as compared to New Orders may explain why Backlogs growth slowed sharply in the May data. In four of the first five months of 2018, Production growth exceeded New Orders. Consistent with the Gardner Intelligence team’s understanding of the manufacturing business cycle, fabricators are continuing to adjust and increase production output through improvements to their supply chains and employment levels. The elevated growth in New Orders since 2017 has forced shops to make long-run changes to their operations to accommodate stronger demand for products. 

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