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, 2023

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.

https://www.prnewswire.com/news-releases/manufacturing-pmi-at-47-4-december-2023-manufacturing-ism-report-on-business-302024715.html