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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. 6. April 2015

March MBI Highest Since June 2014

With a reading of 52.6, the Gardner Business Index showed that the metalworking industry grew for the 15th consecutive month and the 17th time in 18 months. With the increase in the index in March, the metalworking industry has returned to the uptrend that started in September 2014. While the index has been climbing in recent months, compared with one year ago the index has contracted for three straight months. So, the metalworking industry is growing but not as fast as it was at the beginning of 2014.

New orders and production increased for the 18th month in a row. The index for both was substantially higher this month compared with last month and near its highest point in almost a year. Yet, backlogs contracted for the 12th straight month. The backlog index does seem to have stabilized in recent months though. Compared with one year ago, the backlog index has contracted for three consecutive months. And, the annual rate of change peaked almost eight months ago, which means growth in capacity utilization has probably seen its peak for a while. The rate of hiring picked up significantly in March as the index reached its highest level since November. Exports contracted at a similar rate compared with last month due to the relatively strong dollar. Supplier deliveries continued to lengthen, but they did so at nearly the slowest rate in a year.

While material prices continued to increase, the rate of increase continued to decline. In March, material prices increased at their slowest rate since October 2010. Prices received were flat in March, which was the first time they did not increase since April 2014. Future business expectations improved slightly month. The index is about 5 percent above its historical average.

Plants with 20-49, 100-249, and 250 or more employees recorded a significant improvement in business conditions in March. The largest facilities are still growing significantly faster than the rest of the industry though. Shops with 50-99 employees have seen consistently strong growth since the end of 2013. Shops with 19 or employees remained mired in contraction. They have recorded only two months of growth since March 2012.

Five of the six regions expanded in March. The West, North Central – East, North Central – west, and Northeast regions saw very similar growth rates this month. For the second month in a row expansion was minimal in the Southeast. The South Central has contracted for four months in a row. In the last three months, the index for the South Central has been below 40.

Future capital spending plans contracted 19.4 percent compared with March 2014. This was the sixth straight month of contraction compared with one year ago. The annual rate of change contracted for the fourth month in a row.

More economic news from Gardner Business Media can be found here.

Posted by: Steve Kline, Jr. 11. March 2015

February MBI Shows 14th Month of Industry Growth

 

With a reading of 50.8, the Gardner Business Index showed that the metalworking industry grew for the 14th consecutive month and the 16th time in 17 months. The MBI increased from September to December 2014, but in the first two months of 2015 the index moved slightly slower. Overall, the index has been relatively flat since the summer of 2014. For the second month in a row, the index was about 5 percent lower than it was one year ago.

Both new orders and production increased for the 17th month in a row. Since September 2014, the new orders index trended up slightly. Production was on a similar trend, but fell off significantly in February. Backlogs continued to contract. In fact, the index was at its lowest level since September 2013. Compared with the same month one year ago, the backlog index contracted by more than 11 percent for the second month in a row. The annual rate of change decelerated for six months in a row, which indicates that the rate of growth in capacity utilization will peak any month now. Employment was still increasing, but the index was at its lowest level since December 2013. The dollar continued to strengthen against almost every other currency. Therefore, exports continued to contract at a significant rate. Supplier deliveries lengthened at their fastest rate in nearly three years.

Material prices increased at a somewhat faster rate than the previous month. However, the rate of increase was still virtually the slowest in the last two years. Prices received increased at a pretty steady rate for the last 10 months. Future business expectations improved slightly from January. The expectations index was near its peak level since the summer of 2012.

Plants with more than 250 employees expanded at a significantly slower rate in February. It was the second lowest rate of expansion since December 2013. These large plants were the prime reason for the slower growth in the metalworking industry, as all other plant sizes had fairly stable business conditions in February. Plants with 50 to 249 employees continued to grow at a good clip. Shops with 20 to 49 employees expanded for the second time in three months. Shops with fewer than 20 employees continued to contract at a rate similar to the last nine months.

The North Central – East was the fastest growing region for the second month in a row. This region is heavily dominated by the automotive industry. It was followed by the West, North Central – West, and Southeast regions. The Northeast contracted for the second month in a row. And, the index in the South Central continued to fall.

Future capital spending plans contracted 4.5 percent compared with February 2014. This was the slowest month-over-month contraction in the last five months. The annual rate of growth contracted for the third month in a row.

More economic news from Gardner Business Media can be found here.

Posted by: Steve Kline, Jr. 6. February 2015

January 2015 Metalworking Business Index Shows Similar Growth to Previous Months

 

With a reading of 51.2, the Gardner Business Index showed that the metalworking industry grew for the 13th consecutive month and the 15th time in 16 months. The index has indicated a fairly constant rate of growth since October. While the index shows continued growth in the industry, the month-over-month rate contracted 5.5 percent, which was the first month of contraction compared to one year ago since August 2013. The annual rate of growth decelerated for the fourth month in a row.

Both new orders and production increased for the 16th month in a row. The new orders index has been somewhat range bound since July. However, the production index has increased noticeably over that same time period. Therefore, backlogs continued to contract but at a somewhat slower rate than previous months. Compared to the same month one year ago, backlogs decreased 11.4 percent. That was the third time in four months that have contracted month-over-month. While it was still growing quickly, the annual rate of growth has decelerated for five months in a row. This indicates that capacity utilization will likely see its peak rate of growth in the first quarter of 2015. Employment continued to expand but did so at its slowest rate of 2014. The rate of contraction in exports accelerated due to the strengthening dollar. Supplier deliveries continued to lengthen, increasing at their slowest rate of 2014.

Material prices increased at a slower rate once again. The material price index was at its lowest level since August 2012. Prices received have increased the last nine months. The rate of increase has been fairly constant since October. This is the strongest period of sustained price increases by metalworking facilities since the summer of 2012. Future business expectations decreased somewhat but remained at about the average level since the end of 2013.  

Plants with more than 250 employees grew at a much faster rate in January. In fact, the index was its highest level since September. The index at facilities with 100 to 249 employees remained strong. Plants with 50 to 99 employees recorded their fastest expansion since August. While shops with fewer than 50 employees saw minimal growth last month, they contracted this month. Generally, the smaller the plant, the faster the contraction.

Thanks to the falling oil price, the index for the South Central has fallen off a cliff the last three months. The South Central in January was the only time any region has recorded an index below 40. The North Central – East was the fastest growing region, and it was closely followed by the North Central – West. Also expanding was the Southeast. Joining the South Central in contraction were the West and Northeast regions.

Future capital spending plans contracted 24.0 percent compared to January 2014. This was the fastest month-over-month contraction since June 2012. The annual rate of growth contracted 3.9 percent, which was the second month in a row of annual contraction.

More economic news from Gardner Business media can be found here.

Posted by: Steve Kline, Jr. 13. January 2015

December 2014 Metalworking Business Index (MBI) at 52.1

 

With a reading of 52.1, the Gardner Business Index showed that the metalworking industry grew for the 12th consecutive month and the 14th time in 15 months. December’s rate of expansion was the fastest since August, and the rate of expansion accelerated slightly throughout the fourth quarter of 2014. The month-over-month rate of growth was 4.4 percent, which was faster than the previous two months. The annual rate of growth decelerated for the third month in a row.

Both new orders and production increased for the 15th month in a row. The new orders index was noticeably higher than last month and hit its highest level since August. The production index was virtually unchanged from last month. Backlogs continued to contract but at a noticeably slower rate than the last three months. Compared to the same month one year ago, backlogs increased 6.6 percent. They had contracted the previous two months. While it was still growing quickly, the annual rate of growth has decelerated for four months in a row. This indicates that capacity utilization will likely see its peak rate of growth in the first or second quarter of 2015. Employment continued to expand, but it did so at its slowest rate of 2014. The rate of contraction in exports continued to slow. Supplier deliveries continued to lengthen, increasing at their fastest rate since August.

Material prices increased at a sharply slower rate. The material price index was under 60 for the first time since December 2013 and at its lowest level since October 2012. Prices received have increased the last eight months. The rate of increase was the fastest since August. This is the strongest period of sustained price increases by metalworking facilities since the summer of 2012. Future business expectations increased slightly, reaching their highest level since May.

Plants with more than 100 employees grew at a somewhat faster rate than last month. These plants still have significantly better business conditions than smaller facilities. However, plants with 50-99 employees continued to grow at a decent rate. Shops with 20-49 employees grew for the second time in three months. And, in a positive sign for the industry, shops with fewer than 20 employees grew for the first time since January 2014 and just the second time since March 2012.

The South Central had been the fastest growing region for five months in a row, but it contracted hard in December thanks to the steep fall in oil prices. It was the only region to contract this month. The fastest growing region was the North Central – East. It was followed by the Northeast, Southeast, West, and North Central – West.

Future capital spending plans contracted 13.9 percent compared to December 2013. This was the fastest month-over-month contraction since April 2013. The annual rate of growth contracted 1.9 percent, which was the first time it contracted since October 2013.

Posted by: Steve Kline, Jr. 15. December 2014

November MBI Growth Remains Steady

With a reading of 51.3, Gardner’s Metalworking Business Index (MBI) showed that the industry grew in November for the 11th consecutive month and the 13th time in 14 months, at a rate slightly faster than October. The month-over-month rate of growth was just 2.0 percent, which was the second slowest rate of growth since August 2013, and the annual rate of growth decelerated for the second month in a row.

Both new orders and production increased for the 14th month in a row, although new orders grew at their second slowest rate since September 2013 while production grew a little faster than it has since July. Backlogs contracted at their fastest rate since December 2013, and compared to the same month one year earlier, they contracted for the second month in a row. While it was still growing quickly, the annual rate of growth has decelerated for three months in a row, indicating that capacity utilization will likely see its peak rate of growth in the first or second quarter of 2015. Employment has continued to expand since August, and the rate of contraction in exports slowed significantly in November, although the dollar continues to appreciate against other world currencies. Supplier deliveries continued to lengthen, but the rate of increase has slowed the last three months.

Material prices have increased at a slower rate since June and were at their slowest rate since December 2013. Prices received have increased the last seven months, although the increase has accelerated the last two months. This is the strongest period of sustained price increases by metalworking facilities since the summer of 2012. Future business expectations increased sharply in November and were at their highest level since May.

Future capital spending plans contracted 13.7 percent from a year earlier, the fastest month-over-month contraction since February. The annual rate of growth decelerated to 0.5 percent. 

Click here for more economics news from Gardner Business Media.

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