PMPA Business Trends Report reclaims all-time record high of 143 in August. March 2018 was the first time that our sales index recorded such strong sales.
Eighty percent (80%) of our respondents reported sales increases, 51 percent of shops reporting reported sales increases in the double digits.
Sentiment indicators remain strong.
Our markets and businesses have changed- have we as managers kept up?
How are you managing differently for success rather than survival?
Month: September 2018
PMPA Business Trends September 2018
“Strong September Sales- Strong 3Q for Industry Shops”
With 83 companies responding, the PMPA Business Trends Index for September 2018 declined 7.7 percent from August’s record high of 143 to 132. Our Sales index is 106% of its value one year ago. This is the first time on record that we have recorded such a high September- The five-year average for September is 119.6, making this September reading 10.4% higher than the five-year average for September’s index. Demand has been strong for our precision machined products. Our year to date average is 135, up 10 points or 8% over 2017’s year-end average of 125. We are at 107% year to date.
The ISM PMI was reported at 61.3, the highest reading since January 2004, when it was 60.8.
Prior to that the ISM PMI has not been at this level since 1984, when it was 61.3 in February, in 1987 it made it to 61.0 in December.
Here is the ISM’s Announcement:
“The August PMI® registered 61.3 percent, an increase of 3.2 percentage points from the July reading of 58.1 percent. The New Orders Index registered 65.1 percent, an increase of 4.9 percentage points from the July reading of 60.2 percent. The Production Index registered 63.3 percent, a 4.8-percentage point increase compared to the July reading of 58.5 percent. The Employment Index registered 58.5 percent, an increase of 2 percentage points from the July reading of 56.5 percent. The Supplier Deliveries Index registered 64.5 percent, a 2.4-percentage point increase from the July reading of 62.1 percent. The Inventories Index registered 55.4 percent, an increase of 2.1 percentage points from the July reading of 53.3 percent. The Prices Index registered 72.1 percent in August, a 1.1-percentage point decrease from the July reading of 73.2 percent, indicating higher raw materials prices for the 30th consecutive month.” ISM Timothy R. Fiore Press Release
Positive Takeaways:
- Manufacturing continues to expand. the 3.2 point jump from July to August was a substantial increase.
- The overall economy continues to expand- 112 consecutive months of economic expansion.
- The increases from July to August were especially robust for New Orders (up 4.9%); and Production (up 4.8%).
- Other indicators for employment, inventories, supplier deliveries increased on the order of 2% or more.
- The Prices Index fell 1.1 percent in August from July, but still showed increasing costs for raw materials, for the 30th consecutive month.
Thoughts to consider: while past performance is no assurance of future performance, we note that the current level of the PMI has been of prior high water marks, rather than sustainable levels. While “this time it’s different,” is a possible comment, our look at the graph above suggests that we may be nearing the top. Although the values for the 1964-1966 do provide another possible interpretation.
Bottom line: Manufacturing and the broad economy showed remarkable strength in August 2018. Prospects remain positive for sales and employment in manufacturing. The current strong level of performance convinces me that we must be thoughtfully reconsidering all aspects of our business at this time. This trend might have legs- it might also be nearing a top. PMPA’s Latest Business Trend Report was optimistic on Outlook for the next three months.
ISM August 2018
Graph courtesy Calculated Risk
I compile the annual wage survey for the precision machining industry, and my sample is a nice slice of industry shops.
We don’t have any labor jobs in our shop hourly wage survey.
None.
Nada.
Zip!
On the other hand, the jobs that we do have are all jobs requiring high levels of process ownership and personal performance.
Think of all of the aspects of our jobs- the tools, the offsets, the relationships between datums, the materials, the gages, the chips and their control, the coolants, the controls, the software code- and suddenly being a machinist looks a lot like being a Performer:
So today, I’m going to cue up a Neil Peart video on Youtube as an appreciative salute to the music made on our production machines under the watchful practice of our skilled performers.
I’m not celebrating Labor Day.
But I am certainly going to use the time to appreciate the performers in our shops who make things that make a difference.
Happy Performers Day.
Photo credit
More info about the Human Performance System Approach to understanding our shops
Neil Peart photo
Published September 2018
By PMPA Staff
Precision machined products industry professionals are invited to participate in PMPA’s Annual Meeting this fall at the Ritz-Carlton Grande Lakes in Orlando, Florida. This is the place for senior management and company owners to connect and learn from one another by actively participating in this conference.
Published September 2018
By Miles Free III
Congratulations on your graduation! Congratulations on persevering and completing a major life milestone. Your experience with completing your education through high school bodes well for your continued success in life.