August MBI at 53.9 – Third Lowest Since Growth Began

With a reading of 53.9, the MBI showed that the metalworking industry fell to its third slowest rate of growth since the most recent expansion began in August 2009. Also, this is the third straight month that the pace of growth in metalworking has slowed. The most significant reason for the slowing growth is contraction in new orders and backlog. For the first time since July 2009, new orders at metalworking facilities contracted. Contraction in new orders, combined with continued robust growth in production, led to the contraction in backlogs in August.

There has been only one other contraction in backlogs since August 2009. The contraction in these two subindices could be a leading indicator that the total MBI will show the metalworking industry is contracting in upcoming months. The other four subindices (production, employment, exports and supplier deliveries) all indicated growth in August, and all of these subindices indicated accelerating growth except for supplier deliveries.

While last month saw a record high in future business expectations, those expectations cooled in August. Expectations are at the low end for the most recent expansion, but still significantly above the average since the inception of the MBI.

Finally, expectations for future capital spending fell slightly in August, which could be a further sign that metalworkers are growing more cautious. For more results, go here.