June MBI at 59.2 – Growth Rate Strong but Slowing

With a reading of 59.2, the MBI showed that the metalworking industry has been growing for 11 consecutive months. During those 11 months, the growth rate in the industry has had two strong accelerations and one noticeable deceleration. In June, while the growth rate remained strong it was starting to decelerate. All of the subindices indicated growth in the metalworking industry, but four of the six (new orders, production, employment and exports) showed signs of slower growth.

While new orders had been improving in recent months, the growth rate slowed in June. Since March, production has seen a slightly slower rate of growth. However, since new orders had risen more than production in the first part of this year, backlogs are still increasing at faster rate. This should sustain production at metalworking facilities for at least a few months, even if new orders continue to grow more slowly.

Exports have seen their most significant expansion since the middle part of 2008 and, even though the growth rate is significantly slower than last month, employment in the metalworking industry continues to expand. Material prices continue to slow their rate of growth as the effect of government stimulus wear off. But, prices received remained flat, which means there is still pressure on the bottom line. Future business expectations remain strong, and the average spending on capital equipment for the next 12 months reached its highest level since February 2008.