The Institute for Trend Research (ITR) quarterly reports focus on major areas of economic growth and decline in key market segments for the Precision Machined Products Industry. They are provided to PMPA members as part of the association’s overall business intelligence program and are used as a management tool to help PMPA members plan for what lies ahead and which markets they should focus on in a complex manufacturing environment.
With 80 companies responding, the PMPA Business Trends Index for November 2018 declined 11 points to 130,
which was an all-time high for the month of November! Shops reporting sales declines outnumbered those reporting
gains by a ratio of 4:1 not at all unexpected considering the seasonality of shipments this time of year. The Business Trends
Sales Index remains on track to close the year up 8% over 2017. Outlook- despite the seasonality, respondents’ sentiment for Sales in the next three months increased in November, while Lead Times remained steady.
The five-year average for November is 114.6, making this November reading 13% higher than the five-year average for
November sales. Our year to date average is 135, up 10 points or 8.0% over 2017’s year-end average of 125. How does your
shop’s sales compare?
Our Take– Job gains beat consensus expectations, Unemployment is at its lowest level since I was a junior in High school, Participation rate matches its best level this year, and private non-farm wages have risen 3.1% this year according to this BLS jobs report. Bottom line–the US economy is based on consumer spending. This report shows that consumers are growing their purchasing power a positive indicator for the economy going forward.
“Total non-farm payroll employment rose by 250,000 in October, and the unemployment rate was unchanged at 3.7 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care, in manufacturing, in construction, and in transportation and warehousing.”
“In October, employment in manufacturing increased by 32,000. Most of the increase occurred in durable goods manufacturing, with a gain in transportation equipment (+10,000). Manufacturing has added 296,000 jobs over the year, largely in durable goods industries…On average, 213,000 jobs have been added each month in 2018 YTD.”
“The labor force participation rate increased by 0.2 percentage point to 62.9 percent in October but has shown little change over the year.
“In manufacturing, the workweek edged down by 0.1 hour to 40.8 hours, and overtime was unchanged at 3.5 hours.“
“In October, average hourly earnings for all employees on private nonfarm payrolls rose by 5 cents to $27.30. Over the year, average hourly earnings have increased by 83 cents, or 3.1 percent.“
“The unemployment rate remains at it’s 48 year low, 3.7%- lowest rate since 1969. Interestingly, not a single industry was reported to have lost any jobs.”
In 1911, Lovejoy Chaplet Corp. opened for business in the small town of Hoosick Falls, New York. The company was originally a manufacturer of foundry works parts, mostly tin shelled chaplets and hinge tubes, and had a bank of Browne and Sharpe screw machines that ran off power shafts from the ceiling of the plant floor.
PMPA’s Business Trends Index for September 2018 came in at 106% of its value a year ago, despite its 7.7% decline from August’s record tying performance. September 2018’s value of 132 is a record for the month of September, a frequent occurrence this year. The September 2018 value of 132 is also 10.4% above the five year average for the index in the month of September. year to date our index indicates that sales up 10 points or 8% over the 2017 year-end average.
Opinions for the next three months compared to today:
Net Sales: The sales outlook confirms Pareto’s law with 80% of reporting shops expecting sales to improve or remain level over the next three months.
Lead Times: Ninety- one percent of respondents expect lead times to remain the same or increase in the next three months.
Employment: Prospects for employment are positive with ninety-eight percent (98%) expecting level or increased opportunities for employment.
Profitability: Eighty-four percent of our respondents expect business and margins to remain strong for the next three months.
Current Environment: 2018 continues on pace to a much stronger than average sales year as we determined in our April report. The sentiment indicators that we track recognize a seasonal decline ahead, but remain in positive territory for the precision machining industry. Our industry continues to outperform 5-year averages by a wide margin!
PMPA members can download a full copy of the September 2018 Business Trends Report here Key takeaway: Our business has changed- have we adjusted our management thinking to match?