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With a
reading of 53.1, the MBI showed that the metalworking industry grew slightly
faster compared to November. The industry has grown for 29 consecutive
months. After several months of a slowing rate of growth, it appears that the
industry’s growth rate has stabilized. But, the growth rate in November and
December was just barely above the lowest rates of the expansion that began
in August 2009.
While new orders grew slightly faster in December, the rate of growth has
been flat for the last three months. And, this rate of growth in new orders
is the slowest since September 2010. Production grew a little slower in
December. The growth rate in production has been slowing steadily since
September. However, for the third consecutive month the rate of growth in
production was faster than the rate of growth in new orders. Therefore,
backlogs contracted for a third straight month. While backlogs continued to
contract, they did so more slowly. Employment continued to grow at a strong
pace, as it has for all but one month since August 2009. Certainly, the
improvement in the metalworking industry has helped employment levels. But, I
think the employment level also is being buoyed by delivery times for
machines. Many shops have needed to work more and/or add shifts to keep with
all the work until their machines are delivered. Exports contracted for a
fourth month as the dollar rose slightly due to the problems in Europe and
currency expansions in Japan and Switzerland. Also, supplier deliveries
continue to lengthen, but the increase in lead times appear to have
moderated.
Material prices continue to grow faster than the prices received by
metalworkers. In fact material prices have grown faster (or contracted more
slowly) since the MBI was started in December 2006. This indicates that
materials cost has been taking up an ever increasing portion of revenue at
metalworking facilities. Finally, future business expectations have improved
the last two months, breaking the downward trend that began last summer. |
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