The metalworking industry has growin for the past 22 consecutive months. May’s MBI reading of 56.5 showed that the industry increased its rate of growth compared to the previous month. This was largely because of accelerated growth in the employment and backlog subindices. However, all the other subindicies were at the same levels or lower than the previous month.
The employment subindex increased 19.5 points to 69.5, its third-highest level since December 2006. The backlog subindex moved from 43.3 to 55.6. Backlogs contracted each of the two previous months, but they grew significantly in May.
However, the two leading subindicies, new orders and production, are concerning. Both have hit relatively low levels compared to their recent experience. For example, new orders have been growing, but they have reached their slowest rate of growth since August 2010. Also, while production was flat, this was the first time it has not grown since July 2009.
Material prices are growing faster, once again. In the last six months, not a single respondent has indicated having lower material prices. Prices received are growing faster too, but not fast enough to keep up with material price increases. Finally, after a surge last month, future business expectations have once again reached their lowest level since July 2009.
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