Metalworking Business Index Shows Continued Contraction

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.

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