Metalworking Index Plateaus After Blistering First Quarter

The metalworking manufacturing industry reported slowing expansion during April as the Metalworking Index fell slightly to 62.2. Every component of the Index except exports reported expanding activity. The supplier delivery reading rose three points to establish a new all-time high reading.  During each of the last four months ending with April, the supplier delivery reading has established new all-time high readings. Supplier delivery readings rise when a growing proportion of surveyed metalworking manufacturers signal slowing order-to-delivery times from upstream suppliers. The current combination of strong orders and production coupled with slow supply chains has resulted in nearly all survey respondents reporting rising material input prices in recent months.

April reported a combination of slowing new orders and accelerating production activity, narrowing the activity spread between measures which had caused backlog levels to rapidly expand. The combination of an expansionary total new orders reading and contracting export orders reading implies that April’s expanding new orders activity was driven by domestic orders. Further, rising production levels suggest that employment activity has further room to rise. During the peak of the 2018 business cycle, production expansion peaked four months before employment activity.

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