March MBI at 53.4 – Growth Rate Stabilizes

With a reading of 53.4, the MBI signaled that the pace of growth in the metalworking industry stabilized in the month of March. However, the new orders subindex could indicate that the MBI will continue to move down in future months. The new orders subindex dropped to 50.0 in March from 61.1 in February. This was the third straight month of slower growth in new orders. Slowing new orders should lead to a lower production subindex in future months. Also, because the production index is still growing while orders are slowing, the backlog subindex should be pressured to move lower, as well. Employment continues to grow at a healthy clip, but it will be interesting to see how a slowdown in new orders and the passage of health care legislation affects employment in the metalworking industry. Material prices continue to grow at a faster rate, putting more pressure on margins in the metalworking industry. Steel and aluminum were mentioned by several respondents as materials that were going up in price. Future business expectations improved modestly compared to February, but they still seem to be in a down trend that started in October 2009. To participate in the MBI go here.