2018 was a strong year for the precision machining industry. With sales up 7.2% our shops outperformed nearly every benchmark in terms of sales and performance including prior year and 5-year averages. Sentiment indicators bode well for the first three months of 2019.” PMPA Business Trends Report Year-end Summar

PMPA 2018 Yearend summary sentiment graph
Outlook for first three months of 2019: Lead Time remains level, prospects for Net Sales, Profitability and Employment strongly positive.

We remain optimistic regarding manufacturing outlook at our shops’ “component level.” However we acknowledge that the Manufacturing industry’s rate of growth is decelerating.
This difference between decelerating growth (which we believe we are seeing) and declining manufacturing (not what we are seeing) is important to keep in mind.
The level outlook for Lead Time tells me that we our shops are at their “practical” capacity. When they get busier in January , we expect to see this lead time indicator go up.
How to deal with this? Please see our article: Time to Change Your Thinking
 

2018 was a strong year for the precision machining industry. With sales up 7.2% our shops outperformed nearly every benchmark in terms of sales and performance including prior year and 5-year averages. Sentiment indicators bode well for the first three months of 2019.” PMPA Business Trends Report Year-end Summar

PMPA 2018 Yearend summary sentiment graph
Outlook for first three months of 2019: Lead Time remains level, prospects for Net Sales, Profitability and Employment strongly positive.

We remain optimistic regarding manufacturing outlook at our shops’ “component level.” However we acknowledge that the Manufacturing industry’s rate of growth is decelerating.
This difference between decelerating growth (which we believe we are seeing) and declining manufacturing (not what we are seeing) is important to keep in mind.
The level outlook for Lead Time tells me that we our shops are at their “practical” capacity. When they get busier in January , we expect to see this lead time indicator go up.
How to deal with this? Please see our article: Time to Change Your Thinking
 

PMPA Business Trends January 2019

 

“January Sales Record- Positive 3 Months Ahead”

 

With 84 companies responding, the PMPA Business Trends Index for January 2019 jumped to 142, up 15% over December 2018, and up 5% over January 2018. This is virtually an identical repeat of last January’s performance. The January 2019 value is up 13% over the five-year average for the January BT Sales index! This 142 is a new record for January sales index, just as last January’s 135 value was in 2018.

(Procedural note; 22 of our 84 respondents reported sales increase greater than 50% ; 5 of those reported greater than 100% increases in January compared to December. We confirmed the reported values with each of these shops, and only one had been incorrectly reported. We have verified the performance reported.)

 

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Contrary to the negative descriptions of many of the headline writers, the December ISM PMI index came in UP 0.6% from its 5-year average for December from 2013-2017, indicating growth in the Manufacturing sector in December, and in the broader economy.
How bad are those headlines? Sheeeesh!
How about

Bad ISM gives huge push in US T’s back

or :

US Factory Gauge Tumbles by Most Since 2008.

Nothing like calling up the ghost of recessions past. Recession must be imminent, right?
Now before analyzing these incredibly pessimistic headlines, let us state a couple of Facts.
Fact 1) The December 2018  ISM PMI was actually 54.1 and indicated continued economic expansion;
Fact 2) The average December ISM PMI for the five years of 2013-2017 was 53.4;Fact 3) The December 2018 ISM PMI came in actually 0.6 points ABOVE THE FIVE YEAR AVERAGE!
Fact 4) When the ISM PMI fell in September of 2008 to 38.9 in October of 2008, the index was already in negative territory-below 50.
Truth be told, the December 2018 ISM PMI continued to indicate “expansion in the manufacturing sector in December and in the general economy For the 116th consecutive month. ISM
How is that bad news?
While the numeric value of the drop  was the “largest” since 2008- the fact that the index remained in positive economic expansion is ignored in the headline- leaving the reader to ponder the scary connection to the Great Recession of 2008.

The 5-year average for December was 53.4. Why all the weeping and gnashing of teeth?

Here’s my headline- December ISM PMI  index at 54.1 remains solidly positive indicating continued expansion.
Economic expansion in the Manufacturing sector -just above the average for the past five December’s- and the 116th consecutive month of expansion in the broad economy. We see it as good news for the season! We think that you should too!