CW Business Index at 44.6 — Contraction again in September

With a reading of 44.6, the CompositesWorld Business Index for the US composites industry through September 2015 showed that the composites industry had contracted for the fifth time in six months. But the data revealed that the rate of contraction was noticeably slower in September than in August. 

The new orders subindex contracted for the third month in a row here in the US. Nevertheless, that subindex improved somewhat in September after dropping significantly in both July and August. The US composites production subindex, meanwhile, had contracted three months in a row. And it also had improved in September. Notably, it did not fall as far as new orders in the two preceding months. Because production had generally been stronger than new orders, especially during that three-month period, the backlog index had shown contraction throughout 2015 to that point. That said, backlogs, like the other subindices mentioned thus far, did rebound somewhat in September. The trend in backlogs indicated falling capacity utilization at the facilities owned by US composites fabricators. Accordingly, the employment subindex contracted for the second month in a row, falling in September to its lowest level on record with the CWBI. Exports continued to contract because of the strength of the US dollar during the past year. Exports had contracted at a generally accelerating rate through September, and supplier deliveries had lengthened every month since the CWBI survey was first conducted in December 2011. They have lengthened at a slightly faster rate during the four months from June through September.

Materials prices increased, but at a significantly slower rate in August and September. During the latter, that subindex was at its second lowest level since the CWBI’s inception. Prices received, however, were virtually unchanged in September, and that has been the case since May 2015. The future business expectations subindex for US composites manufacturers fell for the third month in a row — September expectations were at their lowest level since August 2014. 

While all US plants of all sizes contracted in August, in September, facilities with more than 250 employees expanded at a significant rate. The subindex at these plants jumped to 61.5 from 49.4 in August. Facilities with 100-249 employees contracted for the second month in a row, but the rate of contraction was slower in September. Facilities with 20-49 and 50-99 employees continued to contract at an accelerating rate for a third month and, at both plant sizes, September’s subindex was the lowest on the CWBI record.  Composites fabricators with fewer than 20 employees contracted for the eighth month in a row. However, the rate of contraction had been relatively modest in three of the four preceding months. 

Although all US regions contracted in August, one managed expansion in September: the Southeast. August was the only month that region had recorded a number under 50.0 since February 2012. The North Central-East contracted in September for the third month in a row and at the same rate as in August. It was followed, but at smaller contraction rates, by the North Central-West, the West, the Northeast and the South Central.

Future capital spending plans fell to their lowest level since the CWBI began. Compared with one year earlier, they were down 50% in September despite an increase over their level in August.