New orders grew for the fifth month in a row and the seventh time in eight months. The rate of growth was the fastest since February 2012. Production has expanded every month but two since January 2013. The backlog index increased for the third month in a row and recorded its fastest rate of growth in the history of the index. The monthly rate of change grew at the third fastest rate since the index began. The trend in backlogs is indicating higher capacity utilization levels and capital spending. Employment has increased at an accelerating rate since February. Exports expanded for the first time since February 2012 and for just the second time since the index began. Supplier deliveries continue to lengthen at a fairly normal rate.
Material prices continued to increase, but they did so at their slowest rate since November 2013. At the same time, prices received were flat. They have been flat or contracted in three of the last four months. Despite the industry reaching its fastest rate of growth, future business expectations have dipped to their lowest level since November 2013. However, expectations are still at a high historical level.
The industry has reached its fastest rate of growth because of significantly better business conditions at the largest and smallest facilities. Companies with more than 250 employees grew at their fastest rate since the index began with an index of 64.7. Also, facilities with 19 employees or fewer grew for just the second time since August 2012. The index for these small companies was 57.4, which is by far and away the highest reading since the index began.
Both custom processors (molders) and metalcutting job shops (moldmakers) have grown four of the last five months. The rate of growth at custom processors slowed somewhat compared to last month. However, metalcutting job shops grew at their fastest rate since November 2013.
Once again three of the four regions expanded in May. The North Central – East region grew at the fastest rate for the third month in a row. It is growing at its fastest rate since March 2012. The Northeast region grew at the second fastest rate this month and for the fourth time in five months. The North Central – West region expanded in May after contracting last month. The West region contracted after two months of growth.
Capital spending plans reached their second highest level since the survey began. Compared to one year ago, future capital spending plans increased 18.3% in May. The annual rate of growth in future capital spending remains quite strong.