Text Box: With a reading of 42.1, the MBI reached its highest level since October 2008, which was the last month the MBI indicated there was growth in the metalworking industry. Although this month’s MBI still indicates contraction in metalworking, the trend line in the overall MBI is up since December 2008. Basically, all of this is say that the industry is still contracting but it is doing so at a noticeably slower rate. Several subindices (new orders, production, and employment) are moving in tandem with the overall MBI – still showing signs of contraction but at a slower rate. The backlog subindex is still quite weak. Taking into account the slowing contraction in other subindices I believe this indicates that customers of the metalworking industry are only ordering enough to replace what they sell instead of building up inventories. This makes sense because consumer spending and business spending on durable goods is still contracting and comments from MBI respondents indicate that there is a “wait and see” attitude among customers. So, the big question on metalworkers’ minds is what happens in the third and fourth quarters of 2009. Well, the future business expectations subindex is at its highest level since August 2007 and the third highest reading ever for the MBI.
Sub-Indices June May Percentage Point Change   Direction Rate of Change Trend (Months)
New Orders 44.1 23.7 20.4   Contracting Slower 9
Production 41.2 28.9 12.3   Contracting Slower 8
Employment 44.2 29.0 15.2   Contracting Slower 8
Backlog 29.4 18.5 10.9   Contracting Slower 8
Exports 47.1 42.1 5.0   Contracting Slower 7
Supplier Deliveries 47.1 52.7 -5.6   Lengthening From Shortening 1
Material Prices 47.1 39.5 7.6   Decreasing Less 8
Prices Received 38.3 39.5 -1.2   Decreasing More 8
Future Business Expectations 76.5 50.0 26.5   Improving From Flat 1
               
Overall MBI 42.1 32.5 9.7   Contracting Slower 8