With a reading of 51.2, the June Metalworking Business Index showed that the metalworking industry has grown for almost three years. However, the current rate of growth is the slowest it has been since this recovery in metalworking began in August 2009. June can be a slower month compared to others, but that is not always the case. Also, the industry has clearly seen slower growth each of the last three months.
The new order growth rate in June was the slowest it has been since August 2010, when new orders contracted. June’s production grew at one of its slowest rates during this expansionary period. However, production grew at a faster rate than new orders. This means that backlogs contracted for the third straight month. In fact, backlogs have contracted six of the last nine months.
Employment continues to grow at a strong pace. With the dollar gaining value relative to other currencies, exports have contracted or been flat since September 2011. While supplier deliveries are still lengthening, the rate of lengthening is the slowest since September 2011. Material prices are increasing but at the slowest rate since October 2010. However, prices received continue to grow at a consistent rate.
Although the index has reached its lowest level since May 2011, metalworking facilities remain optimistic about future business conditions and continue to show a strong interest in new equipment. Average spending per plant on capital equipment for the next 12 months has remained fairly consistent since October 2011. After nearly three years of strong growth, the industry is probably ready for a little bit of a slowdown. With the problems in Europe and the upcoming election, a little breather in the growth rate is probably likely.