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Steve Kline, Jr.

Steve Kline, Jr. has been providing financial analysis and economic forecasts for Gardner Publications, Inc. (publisher of Modern Machine Shop) since 2005. While he has a degree in civil engineering from Vanderbilt University and a MBA with an emphasis on finance from the University of Cincinnati, Steve views forecasting as more of an art than a science. Therefore, his analysis focuses on trends between different data sets to determine where the economy (and, more importantly, the metalworking industry) may be headed. The study of economics is his life’s passion, hence the T-shirts of his favorite economists. Yes…any time he wears these, his wife points out that he truly is a geek.

Posted by: Steve Kline, Jr. 14. January 2016

GBI: Metalworking for December 2015 – 44.0

With a reading of 44.0, the Gardner Business Index showed that the metalworking industry in December reached virtually its highest level since July 2015. This index has been contracting at a stable rate since August, indicating that the industry may have reached a bottom in this cycle.

New orders contracted for the ninth month in a row, but they have trended up somewhat the previous five months. Production contracted for the sixth month in a row, although in November that contraction was at a slower rate. The production index has not improved as much as the new orders index during the last five months, bringing the two into better balance. The backlog index, however, contracted once again in December. Although this index improved noticeably from November, it still indicates falling capacity utilization in the months ahead. Employment contracted for the fifth straight month, although this index has improved since August. The export index contracted for the 21st month in a row, however, its rate of contraction has slowed significantly since August as the strengthening of the dollar has moderated. Supplier deliveries shortened for the third time in four months. Shorter delivery times indicate that suppliers aren’t as busy and, therefore, can more easily meet the demands of customers.

The material prices index was unchanged in December, staying at its lowest level since May 2009. Prices received have decreased since June, although they decreased at a much slower rate in December. Material prices were falling faster than prices received. Future business expectations have been steady, but somewhat low, the last four months of 2015.

Future capital spending plans have remained relatively stable for five months, and in December they were about 33 percent below the historical average. While planned spending was still contracting compared with one year earlier, the rate of contraction has decelerated since June 2015.

Posted by: Steve Kline, Jr. 4. December 2015

GBI: Metalworking for November 2015 - 43.2

With a reading of 43.2, Gardner’s metalworking business index showed that the industry contracted in November for the eighth month in a row. However, the index was unchanged compared with October and has been virtually flat since August, indicating that the industry may have hit a bottom.

New orders contracted for the eighth month in a row, but this index has trended up slightly for four months. Production contracted for the fifth month in a row, however November was the first of those months that the contraction was at a slower rate. Production continued to be relatively stronger than new orders, therefore the backlog index contracted once again, reaching its lowest level since November 2012. Since March 2014, the backlog index has been in a fairly steady downward trend, indicating falling capacity utilization at metalworking facilities. Employment contracted for the fourth straight month, although the index has improved since August. The export index contracted for the 20th month in a row, although the rate of contraction slowed the last three months. Supplier deliveries shortened for the second time in the last three months. Shorter delivery times indicate that suppliers aren’t as busy and can more easily meet the demands of customers.

Material prices fell sharply in November, reaching their lowest level since May 2009. Prices received have decreased since June, although the decrease was significant only in October and November. Future business expectations have been steady but somewhat low the last three months.

In November, future capital spending plans were at their highest level since March, however, they were still only 66 percent of their historical average and contracting at a fairly significant rate compared with one year earlier. 

Click here for more Economic News from Gardner Business Media, publisher of Modern Machine Shop.

Posted by: Steve Kline, Jr. 12. November 2015

Metalworking Business Index Shows Continued Contraction

Metalworking business logo 2015

Metalworking Business Index: October 2015 chart

With a reading of 43.2, Gardner’s Metalworking Business Index showed that the industry contracted in October for the seventh month in a row. While the index was slightly lower than it was in September, it has remained at virtually the same level for three months in a row.

The new orders index also contracted for the seventh month in a row, falling below 40 in two of the previous three months. Production contracted at an accelerating rate for the fourth month in a row, although this index remained above the new orders index. The backlog index, therefore, also contracted once again, reaching its lowest level since August 2013. Since March 2014, the backlog index has been in a fairly steady downward trend, indicating falling capacity utilization at metalworking facilities. Employment contracted for the third straight month, and the export index contracted for the 19th month in a row, although its rate of contraction slowed in September and October. Supplier deliveries lengthened after shortening in September for the first time since June 2013. Shorter delivery times indicate that suppliers aren’t as busy and can more easily meet the demands of customers.

Virtually all commodities have fallen in price throughout 2015, and, as a result, the material prices index reflected that material prices decreased in October for the second month in a row. This index has declined consistently since June 2014. Prices received contracted for the fifth month in a row, the longest sustained stretch of contracting prices since early 2010. Future business expectations improved somewhat in the month.

Future capital spending plans contracted 15.3 percent in October compared with one year earlier. This is the first time since February that spending plans contracted at a rate slower than 20 percent.

Click here for more economic news.

Posted by: Steve Kline, Jr. 14. October 2015

Metalworking Business Index for September: 44.1

 

With a reading of 44.1, Gardner’s Metalworking Business Index showed that the industry contracted in September for the sixth month in a row, although it did improve compared with August. New orders also contracted for the sixth month in a row, but the rate of contraction was noticeably slower than the month before. Production contracted at an accelerating rate for the third month in a row, but the production index remains above the new orders index. The backlog index, therefore, contracted once again. Since March 2014, this backlog index has followed a fairly steady downward trend, indicating falling capacity utilization at metalworking facilities. While employment contracted for the second consecutive month, the rate of contraction was noticeably slower in September than it was in August. The dollar continues to increase in value relative to almost every other currency, therefore the export index contracted for the 18th month in a row. Supplier deliveries shortened for the first time since June 2013, and shorter delivery times indicate that suppliers aren’t as busy and can more easily meet the demands of customers.

Virtually all commodities have fallen in price throughout 2015. As a result, the material prices index showed that material prices decreased in September for the first time since June 2009. This index has fallen consistently since June 2014, while prices received have remained relatively stable this year. The combination of falling material prices and stable prices received should boost profitability at metalworking facilities some. The future business expectations index continued to fall in September and was at its lowest level since November 2012.

Future capital spending plans were basically unchanged from August, however, compared with one year earlier, they fell 26 percent. That’s the sixth month in a row that metalworking facilities have cut capital spending plans by more than 20 percent.

Posted by: Steve Kline, Jr. 9. September 2015

August MBI Index at 43.3 – Lowest Index since July 2009

With a reading of 43.3, Gardner’s Metalworking Business Index showed that the industry contracted in August for the fifth month in a row to its lowest level since July 2009, when the index was 36.5. The rate of contraction accelerated significantly in July and August. Compared with one year earlier, the index has contracted for eight consecutive months, and August’s rate of contraction was the fastest of those eight months.

New orders also contracted for the fifth month in a row, and, like the total index, their rate of contraction accelerated in July and August, taking this subindex to its lowest level since July 2009. Production contracted for the second month in a row and the third time in four months, although the rate of contraction was significantly slower than that of new orders. The backlog index, therefore, continued to contract at an accelerating rate, falling in August to its lowest level in two years. The decline in this subindex has been fairly steady since March 2014, indicating that capacity utilization will fall heading into 2016. Employment fell for the first time since August 2013, and its drop from July was quite significant. Because of the rapid appreciation of the dollar over the last year, exports also contracted at their fastest rate since July 2009. Meanwhile, supplier deliveries continued to lengthen at a moderate rate similar to the previous three months.

Material prices increased at a notably slower rate in August, and, in fact, their index fell to its lowest level since November 2009 when it was 50.0. Prices received by metalworking facilities contracted for the fourth time in five months, however, this index has been just below 50.0 in each of these months. Future business expectations weakened slightly compare with the previous three months and have been below average for five straight months. They are at their lowest level since September 2013.

The one bright spot is that future capital spending plans reached their highest level since this past March, although they were still about 33 percent below their average since December 2006.

For more economic news, visit Gardner Business Media's Economic News Blog.

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