April MBI at 56.0 – Industry Expands Faster

With a reading of 56.0, April's MBI showed that the metalworking industry expanded faster for the second straight month. The current expansionary period has lasted for nine months now. The April MBI is the first since the MBI was created in December 2006 in which all six subindices were expanding (above 50.0). This seems to indicate that the current expansion is on fairly solid footing.

New orders, backlog and supplier deliveries contributed the most to the improvement in the MBI. While production and employment were still growing in April, they did so at a slower rate than in March. Also, exports, the other subindex used to compute the overall MBI, grew for the first time since October 2009. Material prices continued to grow faster, as they have since November 2009. Fortunately, the metalworking industry was able to increase the prices it charges for the first time since August 2009. However, there is still pressure on profits from the strong rise in material prices.

Future business expectations remain strong. That subindex is at 75.0 versus an average of 64.8 since December 2006. However, future business expectations have been sliding lower since they peaked in October 2009. While the industry is still strong, it appears that respondents are starting to become concerned about the sustainability of the current recovery.