November MBI at 50.3 – Two Months of Growth

With a reading of 50.3, Gardner’s metalworking business index showed that the metalworking industry expanded for the second month in a row—the first time the industry has grown for two consecutive months since summer 2012. The index was 15.4 percent higher than it was in November 2012. This is its fastest month-over-month rate of change since July 2010, and it is third straight month of month-over-month growth.

Both new orders and production grew for the second month in a row, but production grew at a faster rate than new orders in each of the months. Backlogs continue to contract, but, compared to the same months one year ago, this index has increased three of the last four months. This is a strong indication that capacity utilization in the metalworking industry should increase in the early part of 2014. Employment expanded at a faster rate in October and November, and supplier deliveries continued to lengthen.

Material prices have increased at a relatively constant rate since April 2013, but prices received by metalworkers hardly increased at all in 2013. Future business expectations improved the previous three months, reaching their highest level in November since May 2012.

Mid-size facilities continued to grow at a similar rate to October. Plants with more than 250 employees saw their rate of growth pick up significantly, while plants with 20-49 employees were essentially flat, an improvement from the previous several months. The smallest shops continued to contract but at their second-slowest rate since May 2012.

Future capital spending plans were at their highest level since February 2013. In fact, November’s planned spending was 32.0 percent higher than a year earlier. Month over month, spending plans increased in the previous three months, and the annual rate of change grew in November for the first time in three months.