Modern Machine Shop

SEP 2013

Modern Machine Shop is focused on all aspects of metalworking technology - Providing the new product technologies; process solutions; supplier listings; business management; networking; and event information that companies need to be competitive.

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by the numbers Columnist Columnist Contraction Slows ith a reading of 48.5, Gardner's MBI showed that the metalworking industry contracted at a much slower rate in July compared with June. While the industry has contracted every month but one since July 2012, the index has been moving up since November because better business conditions are spreading to smaller facilities. Throughout 2013, I have highlighted the fact that business conditions have been split between large and small shops. Metalworking facilities with more than 50 employees have been growing, while those with fewer than 50 employees have been contracting. In July, facilities with 20-49 employees began growing for the first time since March and only the second time since October. These shops grew at their fastest rate since August W steVen r. KLIne, Jr. Market analyst Contact Steven R. Kline Jr. on MMS Online at mmsonline.com/ experts or visit his blog at gardnerweb.com/economics/blog. 2012. Therefore, the July index showed significant growth in all facilities with more than 20 employees, but shops with fewer than 19 employees are still mired in contracting business conditions. In fact, business conditions at these small shops contracted at the second fastest rate since April 2012, when this cycle of contraction began. The employment and supplier deliveries subindices indicated expanding business conditions in July. Employment has been growing since December 2012, while supplier deliveries have been lengthening every month but one since at least December 2011. All the other subindices continued to contract in July, but at a slower rate, which is a positive sign. New orders, production, and backlog made significant jumps in July compared with June, while the improvement in exports was more modest. Material prices continue to grow faster and faster each month. While prices received are growing at a relatively constant rate, material price growth is much faster, which puts pressure on profits. Future business expectations continue to move in a generally upward direction. JuLy metaLworKIng busIness Index gardnerweb.com/economics/blog SubindiceS July June % Point change direction rate of change New Orders 48.5 44.3 Production 48.8 Employment 4.2 Contracing Slower 3 46.6 2.2 Contracting Slower 2 51.0 50.3 0.7 Growing Faster 8 Backlog 42.1 38.3 3.8 Contracting Slower 16 Exports 47.0 46.1 0.9 Contracting Slower 20 Supplier Deliveries 53.5 49.5 4.0 Lengthening From Shortening Material Prices 61.5 59.8 1.7 Increasing More 44 Prices Received 50.2 50.7 -0.5 Increasing Less 7 Future Business Expectations 66.4 64.9 1.5 Improving More 50 Overall MBI 48.5 45.8 2.7 Contracting Slower 240 MMS September 2013 mmsonline.com trend (MonthS) 1 4

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