Growth Rate Inches Higher

With a reading of 53.1, the December MBI showed that the metalworking industry grew slightly faster compared with November, marking the 29th consecutive month of industry growth. The growth rate stabilized after slowing for several months, although it was barely above the lowest rates of the expansion that began in August 2009.

While new orders grew slightly faster in December, the new order growth rate was flat for the previous 3 months. Also, the new order growth rate was the slowest it has been since September 2010.

Production grew a little slower in December. This growth rate has been slowing steadily since September. However, it was faster than the new orders growth rate for the third consecutive month. Therefore, backlogs contracted for a third straight month, although they did so more slowly.

Employment grew at a strong pace, as it has for all but one month since August 2009. The improvement in the metalworking industry has helped employment levels, but they are also being buoyed by machine delivery times.

Exports contracted for a fourth month as the dollar rose slightly because of the problems in Europe and currency expansions in Japan and Switzerland. Also, supplier deliveries continued to lengthen, but the increase in leadtimes appears to have leveled.

Material prices continued to grow faster than the prices received by the metalworking industry. In fact, material prices have grown faster (or contracted more slowly) since the MBI began in December 2006. This indicates that material cost accounts for an ever increasing portion of revenue at metalworking facilities. Finally, future business expectations have improved the last 2 months, breaking the downward trend that began last summer.