PMPA shares important precision machining information you may have missed while you were making essential parts.
April 19, 2024
Robotics
Robotics is on the brink of new breakthroughs as technology is getting cheaper. The components to build and utilize robotics are more prevalent in the marketplace. AI is making robotics easier to use and more capable. Simulation technology is allowing robots to learn tasks virtually tackling it in the real world. Our take, Technology is allowing automation to do tasks that were only a dream five years ago. Start asking questions as capabilities of robotics are growing and your next need may be more attainable than ever.
Industrial Production
Industrial production rose 0.4 percent in March but declined at an annual rate of 1.8 percent in the first quarter. Manufacturing output increased 0.5 percent in March, boosted in part by a gain of 3.1 percent in motor vehicles and parts; factory output excluding motor vehicles and parts moved up 0.3 percent. The indexes for durable manufacturing and nondurable manufacturing moved up 0.3 percent and 0.7 percent in March, respectively. Industrial Production remains unchanged compared to year earlier level at 102.7 percent of its 2017 average.
Capacity Utilization
Capacity utilization (broad industry) moved up to 78.4 percent in March, a rate that is 1.2 percentage points below its long-run (1972–2023) average. Capacity utilization for manufacturing moved up 0.3 percentage point in March to 77.4 percent, a rate that is 0.8 percentage point below its long-run average.
Link: https://www.federalreserve.gov/releases/g17/current/default.htm
Our take: The March Data for industrial production as a whole and for manufacturing, both Durable and Nondurables, continued to show positive trend. We look forward to our next PMPA Business Trends Report to confirm that our shops are participating in this positivity.
Deepfakes
As deepfakes become more mainstream the threat to business is becoming greater. The technology is now being used by bad actors to pose as real companies. Our take, A PMPA member company has recently a received false quote request from a legitimate buyer at a legitimate company. The request included prints, specifications, and quantity details. It was a fake request from a hacked account and got caught early. Be on the lookout for bad actors sending you false requests.
Machine Tool Orders
US machine tool orders increase 2.1% over January. Orders are down 16.9% YTD over 2023. With contract manufacturers, the largest purchaser of machine tools, reducing new orders. Our take, there has been a lot of purchases of new machine tools in the last few years. Higher interest rates are most likely weighing on new purchases as well as economic uncertainty.
National Technical Conference 2024
PODCAST – Deep Dive on Delegation
CRIBSHEET – PMPA Speaking of Precision Podcasts: Leadership
PMPA shares important precision machining information you may have missed while you were making essential parts.
April 12, 2024
NFIB Small Business Optimism Index
The NFIB Small Business Optimism Index in the US fell for a third consecutive month to 88.5 in March 2024, the lowest since December 2012 and well below forecasts of 90.2. Our take, NFIB continues to highlight employment problems with 37 percent of companies reporting unfilled job openings. Almost half 48% reported few or no qualified applicants. Finally, 38 percent of companies reported they plan to raise compensation to find qualified applicants.
https://www.nfib.com/surveys/small-business-economic-trends/
https://www.nfib.com/foundations/research-center/monthly-reports/jobs-report/
D-link Devices
A researcher has found that over 92,000 D-link devices have a backdoor account. This is a new command injection and hardcoded backdoor flaw for multiple end-of-life D-link Network Attached Storage Devices or NAS. Our take, if you use D-link devices you need to check the device list provided in the link. There are currently no patches available to fix the vulnerability.
Manufacturing Job Openings
The number of job openings changed little at 8.8 million on the last business day of February, the U.S.
Bureau of Labor Statistics reported today. Over the month, the number of hires and total separations
were little changed at 5.8 million and 5.6 million, respectively.
For manufacturing, Openings in February were 583,000, down 13,000 from January 2023, and down 91,000 from February 2023. Job openings for Durable goods manufacturing were 361,000 in February 2024, up 13,000 from January 2024.
Link: https://www.bls.gov/news.release/jolts.nr0.htm
Our take: Little change, overall, but Durable Goods manufacturing, Our industry showed a 13,000, or 3.7 percent increase over January. We’ll take it.
Factory Orders and Shipments
New orders for manufactured goods in February, up following two consecutive monthly decreases, increased $8.2 billion or 1.4 percent to $576.8 billion, according to the U.S. Census Bureau. This followed a 3.8 percent January decrease.
New orders for durable goods manufacturing were up $3.517 Billion or 1.3 percent to $277.7 after declining 6.9 percent in January.
New orders for fabricated metal products manufacturing were up $272 million or 0.8 percent over January 2024.
https://www.census.gov/manufacturing/m3/prel/pdf/table2p.pdf
Our take: New Orders reversed their downward two month trend, turning to the positive, aligning with our Sentiment indicators in February Business Trends Report. With new orders for all manufacturing up 1.0 percent, durable goods manufacturing up 1.8 percent, and fabricated metals up 5.6 percent Our shops are outperforming.
Shipments of manufactured goods, also up following two consecutive monthly decreases, increased $8.0 billion or 1.4 percent to $581.6 billion in February 2024. This followed a 0.8 percent January decrease.
Shipments of manufactured durable goods increased 1.2 percent in February to $282.6 billion, a dramatic reversal from the December to January decline of 0.7 percent.
Shipments of manufactured Fabricated metals increased 0.5 percent to 36.4 billion, following the prior months 1.3 percent decrease.
Link: https://www.census.gov/manufacturing/m3/prel/pdf/table1p.pdf
Our take: Shipments are not as positive as new orders- but give us a measure of just how much more busy our shops will be in the months ahead.
Summary release link: https://www.census.gov/manufacturing/m3/current/index.html
PMPA ListServe Community Topics
Technical : AWWA CC Thread
Technical : Millipore testing
Corporate : Clean room- lessons learned, and those best avoided.
Corporate : FW: Monthly Manufacturing Policy Slide Deck – April 2024
National Technical Conference 2024
PODCAST – PMPA’s National Technical Conference 2024 – Collaborating For a Better Future
OSHA: Latest Updates (NTC 2023)
PMPA shares important precision machining information you may have missed while you were making essential parts.
April 5, 2024
3D Printed Jet
A couple of stories that are not financial in nature.
A 3d printed jet engine was just test fired for the first time. The engine boasts 90% part consolidation when compared to traditional engine designs. The company went from design to finished engine in 16 months. Our take, this is an incredible achievement in rapid development. A process that could normally take decades has been shrunk to mere months. Our shops need to be nimble and flexible enough to prepare for opportunities that may arise from rapid development.
https://3dprinting.com/news/3d-printed-jet-engine-undergoes-first-test-firing/
Open Sourced AI
Companies are having disagreements over what open source AI really is. Traditionally open sourced software had source code published. Anyone could modify the code and republish as long as the project remained open. AI companies limit access to their models for certain purposes. Most AI companies do not openly publish code. Our take, open source has become a buzzword for AI. Although there are very few projects that follow open source principles. The majority of AI projects can be called “open use” because of the nature of their accessibility. OSI (Open Source Initiative) is looking to change that by creating a framework for determining if AI’s are truly open source.
https://www.technologyreview.com/2024/03/25/1090111/tech-industry-open-source-ai-definition-problem/
Manufacturing Job Openings
The number of job openings changed little at 8.8 million on the last business day of February, the U.S. Bureau of Labor Statistics reported today. Over the month, the number of hires and total separations were little changed at 5.8 million and 5.6 million, respectively.
For manufacturing, Openings in February were 583,000, down 13,000 from January 2023, and down 91,000 from February 2023. Job openings for Durable goods manufacturing were 361,000 in February 2024, up 13,000 from January 2024.
Link: https://www.bls.gov/news.release/jolts.nr0.htm
Our take: Little change, overall, but Durable Goods manufacturing, Our industry showed a 13,000, or 3.7 percent increase over January. We’ll take it
Factory Orders and Shipments
New orders for manufactured goods in February, up following two consecutive monthly decreases, increased $8.2 billion or 1.4 percent to $576.8 billion, according to the U.S. Census Bureau. This followed a 3.8 percent January decrease. New orders for durable goods manufacturing were up $3.517 Billion or 1.3 percent to $277.7 after declining 6.9 percent in January. New orders for fabricated metal products manufacturing were up $272 million or 0.8 percent over January 2024.
https://www.census.gov/manufacturing/m3/prel/pdf/table2p.pdf
Our take: New Orders reversed their downward two month trend, turning to the positive, aligning with our Sentiment indicators in February Business Trends Report. With new orders for all manufacturing up 1.0 percent, durable goods manufacturing up 1.8 percent, and fabricated metals up 5.6 percent Our shops are outperforming.
Shipments of manufactured goods, also up following two consecutive monthly decreases, increased $8.0 billion or 1.4 percent to $581.6 billion in February 2024. This followed a 0.8 percent January decrease. Shipments of manufactured durable goods increased 1.2 percent in February to $282.6 billion, a dramatic reversal from the December to January decline of 0.7 percent. Shipments of manufactured Fabricated metals increased 0.5 percent to 36.4 billion, following the prior months 1.3 percent decrease.
Link: https://www.census.gov/manufacturing/m3/prel/pdf/table1p.pdf
Our take: Shipments are not as positive as new orders- but give us a measure of just how much more busy our shops will be in the months ahead.
Summary release link: https://www.census.gov/manufacturing/m3/current/index.html
PMPA ListServe Community Topics
Technical : Induction Hardening Vendor
Technical : DFARS Compliance
Technical : Assistance with New Britain repair & troubleshooting
Technical : Machining Tantalum
Technical : Fusion 360 for CNC
HR : ITAR US Person Compliance Best Practices
National Technical Conference 2024
CRIBSHEET – No. 126: AISI System of Identification
PMPA shares important precision machining information you may have missed while you were making essential parts.
March 29, 2024
Durable Goods
Durable Goods Surprising Positivity in February
The advance report on durable goods was issued by the US Census, and it was a positive report.
New Orders
New orders for manufactured durable goods in February increased $3.7 billion or 1.4 percent to $277.9 billion, reversing the two prior months decline. Excluding Transportation, New orders increased 0.5 percent. Excluding Defense, New orders increased 2.2 percent. Transportation equipment led the increase up $2.9 billion or 3.3 percent.
Shipments
Shipments of manufactured durable goods in February, increased $3.5 billion or 1.2 percent to $282.7 billion, dwarfing the 0.8 percent January decrease. Transportation equipment led the increase, increasing $3.4 billion or 4.0 percent to $89.8 billion.
Our take: The data speaks, and what we hear is that Transportation, a leading market for our shops, is reviving demand for component parts. This aligns well with the positive outlook from PMPA’s January Business Trends Report sentiment indicators.
Link: https://www.census.gov/manufacturing/m3/adv/pdf/durgd.pdf
EEO-1
The Equal Employment Opportunity (EEO-1) report will be open for submission starting April 30, 2024. This report is an annual requirement for employers with over 100 employees and is submitted to the Equal Employment Opportunity Commission (EEOC). The deadline set by the commission for submission is June 4, 2024. It’s crucial to determine if you are required to file. If you have any questions, the online Filer Support Message Center will be available on Tuesday, April 30, 2024, to provide assistance regarding the 2023 collection.
Present Situation
For March 2024, The Conference board reported that the Present Situation Index- which reports on current conditions- increased 3.4 points from 147.6 to 151.0. This is a positive development. However, the Expectations Index, A short term look at income, business, and labor market expectations fell 2.5 points to 73.8. readings below 80 are said to possibly signal a recession.
Our take: We’ll take the upside on the mixed signals in this report. The data is clear that consumers note that their situations have improved in March. As for the expectation of possible recession, the most anticipated recession in my lifetime continues to stand up all of its forecasters. We’ll take the data like Durable goods that show us how the spending is trending positively in the economy.
Link: https://www.conference-board.org/topics/consumer-confidence
PMPA ListServe Community Topics
Technical : 6062-T6 Aluminum Source
Technical : Type III Cl 3 Hard Coat Anodize, black, Teflon
Technical : ERP Software
Technical : Quick test to determine 1215 from 12L14
Technical : LNS Tryton 112 Compatibility
RE: Technical : Turning Monel K500
Technical : Assistance with New Britain repair & troubleshooting
[PMPA Material & Equipment Exch] ITEM FOR SALE: 5/8″ Round 304L x 14ft
[PMPA Material & Equipment Exch] ITEM FOR SALE: Keyence Controller IM-6601E / Head IM-6120
[PMPA Material & Equipment Exch] ITEM FOR SALE: ACME GRIDLEY, MODEL 4” RB-8
CEO : Aluminum Extrusions- New Determinations from US Department of Commerce
CEO : FW: Monthly Workforce Grants/Incentives Tracking Matrix
Corporate : Aluminum Extrusions- New Determinations from US Department of Commerce
Corporate : Cryogenic Deburring of Plastic
HR : FW: Monthly Workforce Grants/Incentives Tracking Matrix
National Technical Conference 2024
The Point of the Tool Seldom Cuts
PMPA shares important precision machining information you may have missed while you were making essential parts.
March 22, 2024
Cutting Tool Orders
Cutting tool orders came in at 204.5 million in January 2024. Orders were up 4.1% when compared with a year earlier and up 9.1% over December 2023. Our take, cutting tools had a nice finish last year. Cutting tool orders 12 month moving average is riding consistently above durable goods orders. The divergence started back in December of 2022 which correlates well with our business trends reports showing that we are outperforming broader industry.
Machine Tool Orders
January 2024 machine tool orders down 31% when compared to December 2023. Our take, the headline doesn’t tell the whole story. Purchases in December are always elevated as shops take advantage of end of year tax savings. Orders are only down 3.9% over January 2023 which was almost 17% above an average January. We are also coming of a December 2023 number that grew 12.6% over December 2022.
The Corporate Transparency Act
PMPA joins 125 National Associations Requesting Delay in CTA Implementation
The Corporate Transparency Act which specifically targets small businesses subjects covered entities and their “beneficial owners” to vague and complex reporting requirements while putting their sensitive personal information at risk. This was recently challenged in the courts. Bills to delay enforcement have been introduced in the Senate, S. 3625, the Protect Small Business and Prevent Illicit Financial Activity Act and the House. The House Bill (H.R. 5119), was adopted by the House of Representatives on a bipartisan vote of 420-1 on December 12, 2023. PMPA joined 125 other national associations in a letter calling for the Senate to delay the implementation of the CTA as it winds its way through the court challenges. Failure to comply with CTA requirements are felony violations, so this is critical. PMPA will keep you posted as this issue continues to develop.
Our Take: Beneficial owners can be any non equity owning employee that has the authority to make business decisions. The CTA requires submission personal identification for these employees on a government website. It is important to get the legality of this new rule squared away before charging small business job creators with felony paperwork violations.
PMPA ListServe Community Topics
Technical : Induction Hardening Vendor
Technical : DFARS Compliance
Technical : Assistance with New Britain repair & troubleshooting
Technical : Machining Tantalum
Technical : Fusion 360 for CNC
HR : ITAR US Person Compliance Best Practices
National Technical Conference 2024
Demand Drives May 2012 Precision Machining Industry Sales
PMPA shares important precision machining information you may have missed while you were making essential parts.
March 15, 2024
CPI
CPI Increased .4 percent in February over the previous month which met expectations. Year over year CPI rose 3.2 percent. Our take, this is the highest month over month number since August of 2023. Even though the annual increase has settled around the 3 percent range we still have a way to go to get to the target of 2 percent if the month over month numbers remain stubbornly high.
https://www.bls.gov/news.release/cpi.nr0.htm
NFIB Optimism Index
Small Business Sentiment, measured by The National Federation of Small Business fell in February, according to their report published March 12, 2024.
The optimism index fell to 89.4, its 26th straight month below its 50-year average of 98, and its lowest level since May 2023.
The big news in this report was higher prices and interest costs replacing labor quality as the top concern of respondents. Labor quality as the single most important issue fell 5 points to 16 percent, its lowest level since April 2020, during the onset of the COVID-19 Response. Twenty-three percent of small business owners reported inflation as their most important problem, according to the report.
Our take: Small business owners continue to be pessimistic about prospects, based on decaying indicators from Government and Private agencies. In this report, NFIB determined that nearly 39 percent of randomly selected respondents expect economic conditions to further decline. Remember that these indicators are subordinate to actual bookings, and sales data, but keep them in mind, if only to see how advantaged your shop is con=mpared to the broader manufacturing sector. PMPA’s last Monthly Business Trends Index remains positive.
Link: https://www.nfib.com/surveys/small-business-economic-trends/
New Orders
New Orders for manufactured durable goods in January were down three of the last four months and decreased 6.1 percent. Shipments of manufactured durable goods in January were down four of the last five months and decreased 0.9 percent which followed a 0.6 percent December decrease. Transportation led the declines in both cases. Our Take? PMPA’s Business Trends report for January 2024 increased 2.8 percent in January, despite our workproduct largely consumed by Durable Goods markets. We believe that our index leads Durable goods- without our components, they can not ship.
NFIB Small Business Optimism Falls in February
Small Business Sentiment, measured by The National Federation of Small Business fell in February, according to their report published March 12, 2024.
The optimism index fell to 89.4, its 26th straight month below its 50-year average of 98, and its lowest level since May 2023.
The big news in this report was higher prices and interest costs replacing labor quality as the top concern of respondents. Labor quality as the single most important issue fell 5 points to 16 percent, its lowest level since April 2020, during the onset of the COVID-19 Response. Twenty-three percent of small business owners reported inflation as their most important problem, according to the report.
Our take: Small business owners continue to be pessimistic about prospects, based on decaying indicators from Government and Private agencies. In this report, NFIB determined that nearly 39 percent of randomly selected respondents expect economic conditions to further decline. Remember that these indicators are subordinate to actual bookings, and sales data, but keep them in mind, if only to see how advantaged your shop is con=mpared to the broader manufacturing sector. PMPA’s last Monthly Business Trends Index remains positive.
Link: https://www.nfib.com/surveys/small-business-economic-trends/
Jolts
Jolts job openings dropped by 26,000 in the most recent survey to 8.863 million openings. The lowest level in three months. Our take, this is further evidence that the pool of available talent is increasing, if at least temporarily. Unfilled positions should start becoming easier to fill. Demographically we are still headed toward less workers than open positions in the long run.
ICYMI LISTSERVE COMMUNITY TOPICS THIS WEEK
Induction Hardening Vendors
DFARS Compliance
Assistance with New Britain repair and troubleshooting
Machining Tantalum
Fusion 360 for CNC
TAR US Person Compliance Best Practices
Why Tool Life Can Vary: Carbon and Alloy Steels
PMPA shares important precision machining information you may have missed while you were making essential parts.
March 8, 2024
PCE Price Index
The annual PCE price index dropped to 2.4 percent in January from the December 2.62 percent reading. This is the lowest reading since around February of 2021. Our take, there are good signs that the rate increases have done their job to cool inflation. The PCE has a long-term average of about 3.3 percent since 1960. Continued readings around 2 or just under are best for price stability.
https://www.bea.gov/news/2024/personal-income-and-outlays-january-2024
Corporate Transparency Act
Just this week a federal judge in the Northern District Court In Alabama ruled that the Corporate Transparency Act is unconstitutional.
News reports state that enforcement has been halted- for now. It is far too soon to declare a victory- but this is an important first step in the legal fight that is certain to develop.
At this time, the ruling holds only for the plaintiffs.
Our take: There is a long legal battle ahead. PMPA member companies should still understand the rule, determine who in their organization is likely to be considered “Beneficial Owners,” and prepare to comply so if that the Act is ultimately upheld, you will be prepared to file by the January 1, 2025 deadline. We are keeping this one on our short list.
Durable Goods
New Orders for manufactured durable goods in January, down three of the last four months, decreased $18.0 billion or 6.1 percent to $276.7 billion.
Shipments of manufactured durable goods in January, down four of the last five months, decreased $2.4 billion or 0.9 percent to $279.0 billion. This followed a 0.6 percent December decrease.
Transportation led the declines in both cases.
Our Take: PMPA’s Business trends report for January 2024 increased 2.8 percent in January, despite our workproduct largely consumed by Durable Goods markets. We believe that our index leads Durable goods- without our components, they can not ship.
Link: https://www.census.gov/manufacturing/m3/adv/current/index.html
Private Manufacturing Construction
Private Manufacturing Construction rose 2.1 percent to $224.947 Billion over December’s $220.394 billion. It is the largest category of spend in the non-residential sector. As we have noted before the rise of Private Manufacturing construction is a positive indicator for future manufacturing business for our shops as work returns from overseas.
Our take: It is impossible to overdramatize the significance of this indicator. The January 2024 Private construction spend of $224.947 billion dollars is up $60.3 billion, or 36.6 percent above the January 2023 level. We should be preparing for dramatic increases in demand for our precision products as these new facilities come on line.
ISM PMI
According to FXStreet the ISM PMI index declined to 47.8 in February vs the January 49.1 reading. The February number is also well below market expectations of 49.5. New orders and employment were dragging the index down. Our take, the ISM is indicating a slowing in manufacturing overall but according to our Business Trends reports our industry is currently in overdrive. With reshoring in full swing our shops are expecting good things to come with 3 of the four sentiment indicators making positive moves and sales remaining level at a very high value for January. January 2024 also tied for the 2nd highest January in our dataset.
ICYMI LISTSERVE COMMUNITY TOPICS THIS WEEK
Corporate : Looking for 1035 steel
Corporate : FW: Franklin Manufacturing Policy Monthly Slide Deck – March 2024
Corporate : Anyone got any connections that can explain INCOTERMS?
Quality : Calibration equipment for ring gages and plug gages
Technical : Seeking Potential suppliers of Aluminum Extrusion
Technical : Best Practice for Cleaning Shavings
PODCAST – How Do You Know What To Do Next
Why Lead Is NOT An Alloying Element In Steel
PMPA shares important precision machining information you may have missed while you were making essential parts.
Feb 23, 2024
Manufacturing Production – January Blues
Winter Weather was named as a negative factor in the January Manufacturing Production Report issued by the Federal Reserve Tuesday, February 20, 2024.
“Industrial production edged down 0.1 percent in January after recording no change in December. In January, manufacturing output declined 0.5 percent; the index for durable manufacturing edged up 0.1 percent, while the index for nondurable manufacturing fell 1.1 percent.
Among durables, the largest gains were recorded in electrical equipment, appliances, and components as well as in aerospace and miscellaneous transportation equipment. Computer and electronic products also moved up in January.
Our take: From January 2023 to January 2024 the Manufacturing Index declined 0.9 percent. Defense and Space Equipment continue to be a strong market according to Chart 2.
Link: https://www.federalreserve.gov/releases/g17/Current/g17.pdf
Cutting Tool Orders
Cutting tool orders came in at $187.9 Million in December 2023 down 7.3% from November 2023. Orders in December were down slightly, .3%, from December 2022. The year end total for 2023 was up 6.9% over 2022. Our take, last year was a steady growth year for cutting tools. Inflation has cooled in the cutting too market which is good news for our shops bottom lines.
Consumer Sentiment
Cutting tool orders came in at $187.9 Million in December 2023 down 7.3% from November 2023. Orders in December were down slightly, .3%, from December 2022. The year end total for 2023 was up 6.9% over 2022. Our take, last year was a steady growth year for cutting tools. Inflation has cooled in the cutting too market which is good news for our shops bottom lines.
Our take: in the dismal science of Economics, even a very slight change of $0.1 billion can both be “virtually unchanged” and a “new record high.” We’ll stick to making parts that are critical for human safety and quality of life applications, and leave the economics to the pros.
Link: https://www.census.gov/economic-indicators/
click on press release for Advance Report Durable goods.
Machine Tool Orders
Machine tool orders beat expectations in December 2023 increasing nearly 22% over the prior month. The reading came in about 12% above the December 2022. Our take, this is a positive sign for our industry. Shops increasing orders of machine tools correlates with our December business trends report showing strong positive sales expectations going into 2024.
PODCAST – Onshoring Weather Report: Strong Tailwinds!
PMPA shares important precision machining information you may have missed while you were making essential parts.
Feb 2, 2024
Tax Win
Wednesday night was a win for our industry. The House of Representatives passed the bipartisan tax bill that would undo the tax increases that began taking effect on January 1, 2022, under the Tax Cuts and Jobs Act. The Tax Relief for American Families and Workers Act of 2024 delays the R&D amortization provision until 2026 and reinstates full expensing, restores full expensing for capital investments, reinstates the EBITDA standard for interest deductibility, and increases the limitations on expensing under Section 179. This bill has everything PMPA lobbied for during our December 2023 fly-in: an R&D tax fix, restoring 100% expensing, and incentivizing investment in U.S. manufacturing. Over the past two weeks, PMPA members made their voices heard to get this victory in the House, so thank you to the many members who attended the fly-in and those who sent messages to their Representatives to urge support and passage of these vital tax provisions. Now we must continue our efforts if we want to cut our taxes and invest in the U.S. by pushing the Senate to take up and pass the bill immediately. Contact your Senators TODAY and urge them to support and pass the bipartisan Tax Relief for American Families and Workers Act of 2024.
Link: https://www.census.gov/manufacturing/m3/current/index.html#
Rate Status
The Federal Reserve voted to maintain rates this week. According to the FOMC statement “The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.” Our take, the Fed will not provide another dot plot till the March meeting. The main quote from their statement indicates rates will not be going lower until they are sure inflation is settled into a long-term 2 percent range. With the latest CPI unadjusted coming in at 3.4 it may be a while before rates come down.
https://www.federalreserve.gov/newsevents/pressreleases/monetary20240131a.htm
https://www.federalreserve.gov/newsevents/pressreleases/monetary20240131a1.htm
Consumer Confidence
“The Conference Board Consumer Confidence Index® rose in January to 114.8 (1985=100), up from a revised 108.0 in December. The reading was the highest since December 2021, and marked the third straight monthly increase.” If that isn’t enough positivity, here’s what they have to say about the present situation: “The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—surged to 161.3 (1985=100) from 147.2 last month.”
Link: https://www.conference-board.org/topics/consumer-confidence
Our take: Consumer spending is the foundation of the U.S. Economy, And so any sense of consumer attitude that may be driving their spending can be a helpful indicator. When we hear “highest since” and “surged to” we take notice. Do you?
Durable Manufactured Goods
When does “Flat” mean “New Record High?
When the US Census bureau reports new orders for durable goods. In its January 25 release, They report “New orders for manufactured durable goods in December, up three of the last four months, increased $0.1
billion or virtually unchanged to $295.6 billion… Excluding transportation, new orders increased 0.6 percent.”
here’s where it gets interesting Chad Moutray, Chief Economist at NAM noted in his Monday email “(durable goods)… increased 0.6% to a new record high with transportation equipment excluded.”
For the year, transportation excluded, the increase was 0.8 percent.
Our take: in the dismal science of Economics, even a very slight change of $0.1 billion can both be “virtually unchanged” and a “new record high.” We’ll stick to making parts that are critical for human safety and quality of life applications, and leave the economics to the pros.
Link: https://www.census.gov/economic-indicators/ click on press release for Advance Report Durable goods.
JOLTS
Jolts job openings jumped by 101,000 in December. The December reading was the highest in the last three months beating market expectations. The South region saw the largest increase in openings. Our take, all the doom and gloom talk about layoffs in the news doesn’t fit well with the numbers. We have over 9 million jobs open currently, and that number has been rising since October 2023.
https://www.bls.gov/news.release/jolts.nr0.htm
PODCAST – Goals and Achievements for 2024
Why Service Trumps Quality And Price
PMPA shares important precision machining information you may have missed while you were making essential parts.
Jan 12, 2024
Manufactured Optimism
New orders for manufactured goods in November, up three of the last four months, increased $14.9 billion or 2.6 percent to $592.9 billion, the U.S. Census Bureau reported today. This followed a 3.4 percent October decrease. Shipments, up following two consecutive monthly decreases, increased $2.7 billion or 0.5 percent to $580.7 billion.
New orders for manufactured durable goods in November, up two of the last three months, increased $15.0 billion or 5.4 percent to $295.2 billion, unchanged from the previously published increase. This followed a 5.1 percent October decrease. Transportation equipment, also up two of the last three months, led the increase, $14.3 billion or 15.3 percent to $107.8 billion. New orders for manufactured nondurable goods were essentially unchanged.
Our take: New Orders for Manufactured Goods increasing is a promising indicator for our shops in the months ahead. Increase in Manufactured durable goods especially so. While the talking heads predict a bumpy economy in 2024, the data at hand suggest our shops will continue to make essential products.
Link: https://www.census.gov/manufacturing/m3/current/index.html#
International Container Rates Set to Rise Almost 100%
The Journal of Commerce reports that due to disruptions in the Red Sea, “Container lines are quoting spot rates of $5000 per FEU to the US west coast, almost twice the current rate, effective January 15, 2024.” They report “average spot rates jumping more than $500 per FEU in early January as measured by Drewry.” Link requires a subscription: https://www.joc.com/article/carriers-quoting-trans-pac-rates-5000feu-suez-linked-equipment-imbalances_20240105.html
Our take: This development is also a positive for our Manufacturing shops as it makes the cost of imports more expensive. Another tailwind for Reshoring.
World Steel Production
World steel production increased by 3.3% in November over the previous year. Total steel production year to date was up point 5% through the end of November. China increased only 1.5% over the previous year. China is still by far the largest producer of steel in total, but their influence is starting to slow. India made the largest gains at 12.1 percent, increasing their output to just over 7% of global production. The US saw a slight decrease in production of point 5% but is still on track to produce the equivalent of ton produced in 2022.
National Association of Manufacturer’s Outlook Survey
The National Association of Manufacturer’s Outlook Survey for the fourth quarter showed the small business sentiment outlook rising slightly from the third quarter in 2023. Survey participants cited taxes, workforce issues, and political turmoil
as top contributors to their pessimism. Survey positives included an expected growth in prices received for products is expected to rise 1.3% and inventories are expected to fall by 1.7%. Our take? While NAM sees declining inventories as a negative factor, application of lean is a positive in our shops by reducing inventory costs. There were fewer companies expecting a recession in this survey than in 3rd quarter. We expect even greater positive sentiment in Quarter 1 as Automotive manufacturing normalizes.
LockBit
Ransomware gang, LockBit, is going back to the drawing board and looking at new tactics to increase ransom revenue. This group has been responsible for attacks against IK Royal Mail and Japan’s largest port. Attackers are expected to ask victims for 3-10% of annual sales for companies making up 100 million dollars. Obviously our shops
can’t throw away 10% of annual sales on a ransom It is a new year and time to make sure your systems are up to date. Make sure you have regularly scheduled training for your performers.
PMPA shares important precision machining information you may have missed while you were making essential parts.
Jan 6, 2024
Manufacturing – More Good News!
Manufacturing – More Good News!
Construction Spending on Manufacturing is a solid portent for more business for our shops.
It can explain why we are so positive about the activity of our shops in the years ahead. The new manufacturing facilities being built now will need our precision components. Here is a chart from the Federal reserve showing almost hockey stock growth of total construction spending in the US $209 billion dollars by November 2023 up $136,225 billion from the $73,553 billion invested in November of 2020.
Link: https://fred.stlouisfed.org/series/TLMFGCONS
Economic Positivity
New Residential Construction
New Residential Construction is considered to be a leading indicator for our shops, as it leads the purchase of light trucks by contractors and workmen as well as durable goods and HVAC and other systems that require our parts.
Starts
In November, privately owned housing starts jumped almost 15 percent (14.8% to be precise) to 1,560,000 units. This is up 9.3 percent over the November 2022 value.
Single family housing starts increased 18% to 1,143,000.
Multi family (Buildings with five or more units) was 404,900.
Completions
In November, privately owned housing completions were up 5.0 percent above the revised October value, coming in at 1,447,000. While positive month to month, the rate was down 6.2 percent compared to November 2022.
Link: https://www.census.gov/construction/nrc/current/index.html
Job Openings
Jolts job openings slightly lower than market expectations coming in at 8.79 million just below the consensus of 8.85million. It is 62,000 less openings than reported in October 2023. This is the 3rd consecutive month of declines in job openings. Our take, this is continued good news that the job market is finally starting to ease a bit. This will continue to put downward pressure on wage inflation. With less openings there will be more qualified candidates looking for your positions.
Link: https://www.bls.gov/news.release/jolts.nr0.htm
ISM PMI
According to PR Newswire the ISM PMI came in at 47.4% in December 2023 up from 46.7 in November. Beating market expectations of 47.1 PMI is headed in the right direction. PMI is still indicating contraction but can indicate a beginning of expansion when the index moves above 48.7 for an extended period. Our take, it is good to see PMI bouncing back. This is the 3rd highest recorded PMI in 11 months. A few more good readings may be an indication of turn around after the index has been declining since late 2022.