Contraction Slows Noticeably

With a reading of 48.1, Gardner’s MBI showed that the metalworking industry contracted at a much slower rate in September. The index was 3.2 percent higher than it was in September 2012. This was the first time the month-over-month rate of change grew since April 2012.

While every subindex moved lower in August, in September each moved higher and contributed to the slower rate of contraction. New orders reached its second-highest level since March. Production barely contracted, reaching its highest level since May, and the backlog subindex was also near its highest level since March. Employment, exports and supplier deliveries also contributed positively to the overall index. Employment barely contracted for the second month, exports contracted at a slightly slower rate, and supplier deliveries lengthened for the third straight month.

Material prices increased at a constant rate in September. Prices received moved to modest growth from very modest contraction. Future business expectations also improved but are still at their second-lowest level of 2013.

One of the most important reasons for the slower contraction was the significantly higher index for facilities with fewer than 50 employees. These small shops have seen bad business conditions throughout 2013. While they still contracted in September, the index for small shops reached its second-highest level since March.

All nine regions had contracted for three months, however in September, New England grew and the Mountain region remained flat. The East North Central and Middle Atlantic saw minimal contractions. The West South Central contracted faster for the second month, and the East South Central remained the poorest-performing region with its second month in a row of an index below 40.

Future capital spending plans were up 3.0 percent compared to last September. 

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