Text Box: With a reading of 62.7, the MBI showed that the metalworking industry expanded for the sixth straight month, but the reading was slightly lower than December, which indicated a slowing rate of expansion. Also, the changes in the sub-indices in January could be signaling that the expansion is losing steam. The only sub-index to expand faster was production. This was expected given that the growth in new orders was faster than the growth in production the previous six months. The other five sub-indices that comprise the overall MBI (new orders, employment, backlog, exports, and supplier deliveries) declined from the previous month. The surprise decline among those five was backlog. Since orders had been growing faster than production, it seemed that backlog would have continued to increase after new orders started to slow down, but this didn’t happen. Material prices continue to increase, as they have since July 2009. Prices received by metalworkers were flat in January. Future business expectations were still at a high level, but the trend has shown some softening in expectations since October 2009. Two comments could highlight the reason for this softening: “this may be an inventory bubble” and “companies are on hold with their new budgets.”
Sub-Indices January December Percentage Point Change   Direction Rate of Change Trend (Months)
New Orders 76.3 77.3 -0.9   Growing Slower 6
Production 78.9 70.4 8.5   Growing Faster 6
Employment 60.6 61.4 -0.8   Growing Slower 5
Backlog 68.5 70.4 -2.0   Growing Slower 4
Exports 44.8 47.9 -3.1   Contracting Faster 3
Supplier Deliveries 47.4 52.3 -4.9   Shortening From Lengthening 1
Material Prices 57.9 52.2 5.8   Increasing More 2
Prices Received 50.0 43.2 6.9   Flat From Decreasing 1
Future Business Expectations 78.9 81.8 -2.9   Improving Less 8
               
Overall MBI 62.7 63.3 -0.6   Growing Slower 6
 
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