CW Business Index at 51.9 – Three straight months of US growth

At 51.9 in January 2015, the CompositesWorld Business Index showed that the US composites industry had expanded for a third straight month. Prior to that, the Index had hovered around 50.0 from July through October 2014 — the industry had been virtually flat. But, in the last two months of the year, the industry began to expand. Although the Index indicated expansion in the short term, compared to the same period one year earlier, the industry had shown contraction in two of the final four months of the period. The annual rate of change was growing in January but the rate of growth had decelerated during the previous four-month period.

New orders, however, grew for the 14th consecutive month in January. The rate of increase in new orders had been accelerating since July. Production had expanded for almost as long — 13 months. The rate of increase improved markedly in January, and the production subindex was at its highest level since July. Backlogs had contracted every month but one since May 2014. Compared to one year earlier, backlogs contracted 8.9% in January. The trend in backlogs indicated that the industry was very near its peak rate of growth in capacity utilization. That, in turn, indicated that capital spending should peak later this year. Employment continued to grow, but the rate of growth was very modest in January. Exports continued to contract, thanks to the strengthening dollar. Supplier deliveries lengthened at their fastest pace since April 2012.

The rate of increase in material prices had slowed dramatically in the months prior to January. The material prices subindex was at its lowest level since September 2012. Prices received increased for the second month in a row and, indeed, had been increasing, generally, since December 2013. Future business expectations decreased in January, but the general trend had been upward since August 2014.

Facilities with more than 100 employees continued to expand at a very fast rate. Both size categories above 100 employees had indices that ran above 60. Plants with 50-99 employees also expanded and did so at their fastest rate since February 2014. Fabricators with fewer than 50 employees, however, contracted aqain, and did so at a faster rate than they did in December 2014, continuing a decline begun several months earlier.

Regionally in the US, the North Central – West was easily the fastest growing sector for a second month in a row. By Feb. 1, it had expanded in three of the previous four months. It was followed by the North Central – East and the West. The latter had mounted the longest stretch of expansion of any US region. The Northeast and Southeast regions, by contrast, both contracted for a second month in a row.

Future capital spending plans were above US$1 million for only the second time since June 2014. But compared to one year earlier, they were down 13% in January. The month-over-month rate of change had contracted six of the previous seven months. The annual rate of change had contracted at an accelerating rate in both December 2014 and January 2015.