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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 2016

Gardner Business Index: Metalworking March 2016 – 49.7

With a reading of 49.7 in March, the Gardner Business Index showed that the metalworking industry, even though it has continued to contract, has improved significantly since December. The index reached its highest level since March 2015, which was the last time the industry expanded.

The new orders subindex has improved sharply for two months, increasing in March for the first time since the previous March. Production also increased for the first time since last June. Because the new orders subindex has been improving faster than the production subindex, the backlog subindex has improved for four months as well. And while the backlog subindex continued to contract, it made a big jump in February and March. Based on the trend in backlogs, capacity utilization should bottom out in the next six months or so.

Employment contracted for the eighth straight month, although this subindex has improved since August. The export subindex contracted at its slowest rate since March 2015. Supplier deliveries lengthened for the first time since October, indicating increased activity throughout the supply chain.

Material prices increased for the first time since August, although the rate of increase was still the slowest in nearly six years. Prices received have decreased since June, but the rate of decrease has been relatively constant for five months. Future business expectations improved significantly in March, reaching their highest level since last April.

While they are still well below the historical average, future capital spending plans increased to their highest level since last March as well. Compared with one year earlier, planned spending was down just 1.2 percent in March, the slowest rate of contraction since September 2014. This trend indicates that capital spending could begin improving later this year.

For more manufacturing economic news, visit this blog.

Posted by: Steve Kline, Jr. 3. March 2016

GBI: Metalworking February 2016 – 46.3

With a reading of 46.3, the Gardner Business Index showed that the metalworking industry, even though it has continued to contract, improved in February for the third month in a row. The index was at its highest level since June 2015, and every subindex contributed positively to its improvement.

New orders contracted for the 11th month in a row, but this subindex jumped sharply in February, reaching its highest level since May 2015. Production contracted for the eighth month in a row, but the rate of contraction was unchanged from January. With the new orders index catching up to the production index, the backlog index has improved for three months as well. Even though backlogs were still contracting, this subindex was at its highest level since June 2015. Employment contracted for the seventh straight month, although this subindex, too, has improved since August. The export index contracted at its slowest rate since May 2015, and although supplier deliveries have shortened since November, in February they shortened at a slower rate.

The material prices index decreased for the sixth consecutive month, however this subindex decreased at a noticeably slower rate in February. Prices received have decreased since June, and their rate of decrease has been relatively constant for the last four months. Future business expectations improved from January, but they were still below their level of the second half of 2015.

While they are still well below the historical average, future capital spending plans increased in February to their second highest level since March 2015. Compared with one year earlier, planned spending was down 17.8 percent. That was one of the slower rates of contraction since January 2015. While the annual rate of contraction continued to accelerate, it should be nearing its peak rate of contraction.

Posted by: Steve Kline, Jr. 9. February 2016

GBI: Metalworking for January 2016 – 44.4

With a reading of 44.4, the Gardner Business Index showed that the metalworking industry improved in January for the second month in a row. While the industry was still contracting in the month, the index reached its highest level since July 2015 and has slowly trended up since August.

New orders contracted for the 10th month in a row, but this subindex was at its highest level since July. Production also contracted for the seventh month in a row, although this subindex has improved noticeably since October. The backlog index, however, contracted for the 22nd consecutive month. It has steadily declined since early 2014, but there are signs the backlog index may be breaking out of its downward trend. In the months ahead, it still indicates falling capacity utilization, however. Employment contracted for the sixth straight month, although this subindex has improved since August. The export index contracted at a faster rate in January after contracting a steadily slower rate the previous five months. Supplier deliveries shortened for the fourth time in five months. Shorter delivery times indicate that suppliers aren’t as busy and can more easily meet the demands of customers.

The material prices index decreased at a faster rate in January and was at its lowest level since May 2009. Material prices have decreased since September 2015, and prices received have decreased since June, although their rate of decrease accelerated in January. Material prices were falling faster than prices received, however. While future business expectations had been steady over the previous four months, in January they weakened to their lowest level since November 2012.

Future capital spending plans fell to their lowest level since July 2015. Compared with one year earlier, they were down 24.3 percent. The annual rate of change has contracted at a fairly constant rate since November, but it does appear that it will contract at a slower rate in the upcoming months, indicating that the weakest part of the capital spending cycle may be over.

Go here for more economic news from Gardner Business Media.

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.

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