April 2014 MBI: Strong Growth Continues

With a reading of 53.6, Gardner’s April metalworking business index showed that the metalworking industry continues to grow at a fast pace. In each of the first four months of this year, the index has been above 53.0, and the industry grew six of the last seven months. The metalworking industry is still on the uptrend that began in August. In April, the index was 10.5 percent higher than it was one year earlier, the second month in a row that it grew by more than 10 percent. Annually, the industry has grown at an accelerating rate the last two months.

New orders increased for the seventh month in a row, at a steadily accelerating rate. Production also has expanded for seven months, and in recent months it has increased slightly faster than new orders. Therefore, backlogs contracted two out of the previous three months. Yet, compared to one year earlier, backlogs are increasing at a rapid rate. The annual rate of change in backlogs continues to accelerate, which is a positive sign for future capacity utilization levels and capital spending. Employment has expanded since October, but the rate of hiring slowed slightly in April. Exports began to contract once again, while supplier deliveries continued to lengthen at a rate similar to what we have seen since November.

Material prices have increased at a noticeably faster rate in 2014 compared to 2013. However, prices received contracted in April for the first time since August. Future business expectations remain strong even though they have fallen from their high level in the first three months of the year.

After contracting for two months, future capital spending plans increased in March and then again in April, when they were 17.9 percent higher than a year earlier. That is the strongest month-over-month rate of change since November, and it moved the annual rate of change back into positive territory.