September 2014 MBI Shows Slowed Expansion

With a reading of 50.9, Gardner’s Metalworking Business Index showed that the industry grew in September for the ninth consecutive month and the 11th time in 12 months, although the rate of expansion was the slowest of 2014. While the index was still 5.8 percent higher than it was one year earlier, this was also the slowest rate of month-over-month growth since October 2013. The annual rate of growth in the metalworking industry continued to accelerate, however, at its fastest rate since March 2011.

Both new orders and production increased for the 12th month in a row, although in both cases, the rate of expansion was the slowest of the year. Backlogs have contracted noticeably faster since June. However, the month-over-month rate of change was still growing, and the annual rate of growth was at its fastest rate since March 2011. This indicates that capacity utilization should increase rapidly in the upcoming months. Given the trend in backlogs, it is likely that capacity utilization will average more than 80 percent in 2015. Employment expanded at its fastest rate since June, while exports remain mired in contraction. Supplier deliveries continued to lengthen in September but appeared to break the trend of increasing lengthening.

Material prices have increased at a slower rate since June, at a rate similar to the first four months of the year. Prices received have increased the previous five months, the strongest period of sustained price increases by metalworking facilities since the summer of 2012. Future business expectations improved in September, with the index reaching its highest level since June.

Future capital spending plans increased 4.3 percent compared to last September. This was the second month in a row of growth. The annual rate of growth accelerated to 6.1 percent, which was its second fastest rate since March 2013.