Total MBI for January 2015

With a reading of 51.9, the Gardner Business Index showed that the moldmaking industry grew in January for the fourth month in a row and at its second fastest rate since last June, helped by strong car sales in recent months. However, the month-over-month rate of change had contracted four of the previous five months, meaning the industry was expanding, but not as fast as it was one year earlier. The annual rate of change slowed significantly toward the end of 2014 and contracted in January for the first time in the history of the index.

New orders increased in January for the third time in four months. Production levels have surged since September with that index reaching its highest level since May. Backlogs continued to contract, but the rate of contraction has slowed noticeably since September. The backlog index was unchanged from one year earlier, and the annual rate of change decelerated for the fourth month in a row. This trend indicates increasing capacity utilization through at least the end of the first quarter of this year. Employment expanded for just the second time since last May, and, after growing in December, exports contracted once again due to the relatively strong dollar. Supplier deliveries lengthened at their second slowest rate since January 2014.

Material prices were unchanged from December, the first time in the history of the index that material prices did not increase. This index has fallen off a cliff since October. Prices received contracted slightly in January, but, overall, they have generally increased since last July. Future business expectations have plateaued and are still below their peak levels from late 2013 to the summer of 2014.

Plants with 20-49 employees have seen very strong growth three of the previous four months, while smaller facilities, those with fewer than 20 employees, contracted in January for the second month in a row. In fact, these small facilities have had just one month of growth since last May. 

Custom processors expanded for the third month in a row, although the rate of expansion in December and January was quite modest. Metalcutting job shops expanded for the third time in four months.

The North Central–East has been booming since October, and its index has been above 57.0 every month since. The North Central–West expanded in January for the second month in a row, while the Northeast has been contracting since last July.

Future capital spending plans for the next 12 months have taken a huge hit the last three months. In January, they contracted 48.9 percent compared to one year earlier. This is the third straight month of contraction and the second month in a row of more than 40 percent. The annual rate of change contracted in January for the first time since the survey began.

To see the historical breakdown of our business index and each of its subindices, visit gardnerweb.com/forecast/moldmaking.htm.