March MBI Highest Since June 2014

With a reading of 52.6, the Gardner Business Index showed that the metalworking industry grew for the 15^th consecutive month and the 17^th time in 18 months. With the increase in the index in March, the metalworking industry has returned to the uptrend that started in September 2014. While the index has been climbing in recent months, compared with one year ago the index has contracted for three straight months. So, the metalworking industry is growing but not as fast as it was at the beginning of 2014.

New orders and production increased for the 18^th month in a row. The index for both was substantially higher this month compared with last month and near its highest point in almost a year. Yet, backlogs contracted for the 12^th straight month. The backlog index does seem to have stabilized in recent months though. Compared with one year ago, the backlog index has contracted for three consecutive months. And, the annual rate of change peaked almost eight months ago, which means growth in capacity utilization has probably seen its peak for a while. The rate of hiring picked up significantly in March as the index reached its highest level since November. Exports contracted at a similar rate compared with last month due to the relatively strong dollar. Supplier deliveries continued to lengthen, but they did so at nearly the slowest rate in a year.

While material prices continued to increase, the rate of increase continued to decline. In March, material prices increased at their slowest rate since October 2010. Prices received were flat in March, which was the first time they did not increase since April 2014. Future business expectations improved slightly month. The index is about 5 percent above its historical average.

Plants with 20-49, 100-249, and 250 or more employees recorded a significant improvement in business conditions in March. The largest facilities are still growing significantly faster than the rest of the industry though. Shops with 50-99 employees have seen consistently strong growth since the end of 2013. Shops with 19 or employees remained mired in contraction. They have recorded only two months of growth since March 2012.

Five of the six regions expanded in March. The West, North Central – East, North Central – west, and Northeast regions saw very similar growth rates this month. For the second month in a row expansion was minimal in the Southeast. The South Central has contracted for four months in a row. In the last three months, the index for the South Central has been below 40.

Future capital spending plans contracted 19.4 percent compared with March 2014. This was the sixth straight month of contraction compared with one year ago. The annual rate of change contracted for the fourth month in a row.

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