PMBI Shows Fastest Growth Since March 2012

With a reading of 56.6, Gardner’s precision machining index showed that business conditions improved dramatically in January. This was the first month of growth since June 2012. And January was the fourth fastest month of growth since the index began in December 2011. Compared with 1 year ago, the index grew 18.2 percent. This was the fourth month in a row that the index has grown by double digits compared with 1 year ago.

New orders grew for the second month in a row. The new orders index has shot up since August last year. Production grew for the third time in 4 months, but the rate of growth was the fastest since the spring of 2012. Backlogs grew for the first time in almost 2 years. The trend in backlogs the last 5 months indicates that capacity utilization should improve this year. Employment grew at a much faster rate, similar to the rate of growth in 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 have been lengthening at an accelerating rate since the summer of last year.

Material prices increased at a noticeably faster rate in January. Prices received increase for the third month in a row. But the rate of increase has been quite moderate and much lower than the increase in material prices. Future business expectations have shot up the last 4 months, reaching their highest level since March 2012.

Facilities of all sizes grew for the first time since April 2012. Shops with more than 20 employees continued their run of growth, but at a much faster rate this month. Shops with fewer than 20 employees grew for the first time since June 2012.

Every region grew at a significant rate in January. The East North Central region grew at the fastest rate and for the first time since February last year. The Middle Atlantic grew for the second month in a row and at the second fastest rate. Just behind it was the West North Central region, which grew for the third time in 4 months. In order after the West North Central region were the Pacific, New England and South Atlantic regions.

Planned capital expenditures were at their second highest level since August 2012. However, planned spending fell from what it was 1 year ago by 8.9 percent. That may happen again in February, but after that, planned expenditures should be higher than they were 1 year ago.