February PMBI at 56.6 -- Two Straight Months of Growth

With a reading of 52.7, Gardner’s precision machining index showed that business conditions expanded for the second month in a row in February. While the rate of growth was slightly slower than January, the industry has been trending up at a significant rate since last September. Compared with 1 year ago, the index grew 5.4 percent. This was the fifth month in a row that the index has increased compared with 1 year ago. Also, the annual rate of change moved into positive territory for the first time.

New orders grew for the third month in a row. Despite seeing somewhat slower growth this month, they have been trending up at an even faster rate than the overall index. Production expanded for the fourth time in 5 months. It has been improving at a rate similar to that of the overall index. Backlogs grew for the second consecutive month. The trend in backlogs the last 6 months indicates that capacity utilization and capital equipment spending should increase this year. The rate of growth in employment dipped slightly compared with February. However, employment is still expanding at its fastest rate since early 2012. Exports contracted slightly, but the rate of contraction is much slower than at any other time in the survey’s history. Supplier deliveries continue to lengthen, but the rate of lengthening was relatively unchanged from last month. 

Material prices increased at a slightly faster rate in February. They are increasing at their fastest rate since March 2012. Prices received have increased at an accelerating rate each of the last 4 months. However, the rate of increase in prices received is much less than that of material prices. Future business expectations dipped slightly compared with January, but are still much higher than they were last year.

Plants with more than 250 employees grew at a faster rate in February. Facilities with 20-249 employees continued to expand, but they did so at a slower rate this month. Facilities with more than 20 employees have been growing for at least the last 4 months. While shops with 19 employees or fewer grew in January, they contracted once again in February. However, the rate of contraction at these shops was slower than what it was for most of last year.

Every region but one grew in February. The West South Central region grew at the fastest rate. It was followed by the West North Central, Pacific, East North Central, and South Atlantic regions. The Middle Atlantic region contracted after growing the previous 2 months.

Planned capital expenditures were 33.9 percent lower than what they were 1 year ago. This is the second straight month that the month-over-month rate of change contracted. The annual rate of change has contracted at a faster rate each of the last 2 months as well.