February’s MBI indicated that the metalworking industry continued to grow at fairly rapid rate with a reading of 55.9. The previous two months saw faster growth than the fourth quarter of 2011. The growth rate was more in line with the growth rate of the first three quarters of 2011. February marked 31 consecutive months of growth for the metalworking industry.
Like the overall MBI, the various subindices saw little change in February. New orders grew at a slightly faster rate in February than January, 60.0 versus 59.6. While new orders picked up, production saw slightly slower growth in February compared to January, 59.8 versus 61.6. The consistent growth in new orders and marginally slower growth in production caused backlogs to increase for the second month in a row. Employment continued its consistent rate of growth since October. Exports were flat after several months of minor contraction. Widespread strength in the manufacturing sector was evident from supplier deliveries lengthening at a fairly consistent rate since October.
Materials prices, which had risen for 27 straight months, had risen faster each month since November 2011. This was likely due to the vast amounts of money printing by the central banks of Japan, Europe and the United States.
Commodities always react quickly to new money being pushed into the economy. Prices received by the metalworking industry also had risen faster each month since November. However, the rate of growth for prices received was slower than the rate of growth in materials, which put pressure on profit margins.
Future business expectations were slightly less optimistic in February. However, future business expectations remained significantly above the long-term average. Overall, metalworkers were still feeling quite good about business conditions for 2012.
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