Metal Working Business Index Shows some Contraction

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One magazine I read and advertise in is Modern Machine Shop.

In the "By the Numbers" section of magazine typically the last page written by Steven R. Kline, Jr. is an article about metal working and the state of the metal working industry. "With a reading of 46.6 September's Metalworking Business Index showed that metal working industry contracted for the third month in a row."

"Five of the six subindices used to compute the MBI had a negative impact on the reading in September. The new orders contracted faster in September, reaching its lowest level since July 2009."

"The backlog index has contracted for six consecutive months and is at its lowest level since July 2009. Employment continues to expand as it has for seventeen straight months."

I tried to get a link so you can see the entire report, but I get errors. Meanwhile, I will report the findings until the links works.

What does this mean? Why are people hiring when the business is contracting? Extremely strange and I am not sure why. I do know when they are manufacturing less tooling and machines that make parts metal finishing starts to decline. In the past, when inventories were high like in the 1980's it would take three - six months for metal finishing to feel the contraction. Today, I think a contraction should be felt sooner because of JIT systems and less inventory. The Federal Reserve usually examines the tooling production numbers to determine the state of the manufacturing economy. One challenge is today's global economy resulting in the strange numbers.

Typically, in the USA when they make less machines and tooling that is metalworking products it typically leads to a recession in manufacturing. Stay tune to next months report!