Composites Index sets two all-time highs in three months

The Composites Index set its second all-time high in 2021 with a June reading of 64.7. The latest reading comes on the heels of March’s previous all-time high. Strong business conditions and struggling supply chains have resulted in each of the last four index readings topping the 2018 record. June’s reading was supported by accelerating activity in (total) new orders, backlogs, production, employment and export orders. For the first time since the beginning of 2021, a slightly smaller proportion of fabricators indicated slowing order-to-fulfillment times compared to the prior month. This latest reading, however, is still well above historical highs.

The influence of a tight labor market and slow supply chains took its toll on production in the first half of 2021. This was evidenced by the spread between new orders and production which stood at 5.7 points in June, the imbalance of which has thus far resulted in a surge of backlog activity. To put this in perspective, there have been three observable peaks in this spread since 2011, with all three reaching a climax between 1.9 and 2.5 points. The fact that this latest spread is more than double its historical high since at least 2011 does much to explain the unprecedented swell in backlog activity readings in the second quarter of the year.