“With 79 companies responding, the PMPA Business Trends Index for June 2017 increased 5 points or 3.8% from May’s 130 to 135. This is the strongest level of shipments that we have seen in June, prior highs for June were 128 in 2015 and 2016. We continue to be optimistic for a strong performance for the industry for the balance of the year.”
The FED’s Industrial Production (IP) Index rose 0.4 percent in June for its fifth consecutive monthly increase.
Manufacturing output rose at an annual rate of 1.4 percent, a slightly slower increase than in the first quarter.
At 105.2 percent of its 2012 average, total industrial production in June was 2.0 percent above its year-earlier level.
The strength of our PMPA Business Trends Sales Index compared to that of the FED IP Indicator suggests that Industrial Production will continue to rise as companies use the products that we have shipped in excess of the IP demand in June. We remain positive for industry prospects, and note that our Sales Index is up almost 10% over last year’s full year average.
PMPA members can find the PMPA Business Trends Report HERE. Photo Credit Photo backstory
Being bullish on precision manufacturing is a logical conclusion from the strength of these just released economic indicators.
The PMPA Business Trends Report has a sentiment indicator for Sales for three months ahead. In January 2017, that indicator exploded, up 40% from December’s already optimistic number. (see the blue line on the chart below.)
But don’t take our word for it. Here are 7 economic indicators released last week that are at multi year highs:
Consumer Price Index (CPI) up 2.8% year over year in February, up from 0.9% in July and at a pace not seen since February 2012;
Producer Price Index (PPI) up 2.2% year over year, Highest year over year rate since May 2014;
Manufacturing Production up 0.5% in February. Manufacturing Output is up 1.2% over the last 12 months, fastest pace since April 2015;
Housing Market Index hit a 12 year high, its highest level since June 2005;
Housing starts rose 3.0% in February. Single Family housing starts jumped from 819,000 to 872,000 a pace unseen since October 2007;
Index of Consumer Sentiment from University of Michigan was close to January’s reading which was the best reading for this indicator in 13 years;
Retail sales were reported at 5.7 % just below January’s 6.0% year over year pace, highest since 2012.
The weight of the evidence is clear.
The weight of the evidence makes it difficult to be anything but bullish on our business prospects. What are YOU doing to take advantage of the opportunities that this strong economy is providing for YOUR precision machining shop?
Data courtesy Chad Moutray Ph.D., CBE, Chief Economist at National Association of Manufacturers Monday Economic Report
The Bureau of Labor Statistics released Manufacturing Productivity Numbers for second quarter 2014 this morning: “Manufacturing sector productivity increased 3.3 percent in the second quarter of 2014, as output increased 6.9 percent and hours worked increased 3.5 percent. The increase in output was the largest since the second quarter of 2010 (11.6 percent). Productivity increased 3.4 percent in the durable goods sector and increased 4.7 percent in the nondurable goods sector. Over the last 4 quarters, manufacturing productivity increased 2.1 percent, as output increased 3.7 percent and hours increased 1.6 percent. Unit labor costs in manufacturing decreased 1.6 percent in the second quarter of 2014 and increased 0.8 percent from the same quarter a year ago.” BLS release.
If you have been following our blog, this is probably not unexpected news for you. Kalkaska; August Indicators Bullish on MFG
Precision machining companies make the high precision highly engineered components that make most manufactured products function. In other news today seasonally adjusted initial claims for unemployment increased to 302,000; the real U-6 unemployment rate is 12.6%.
Given that the Civilian workforce is 156,123,000 persons, this represents 19,671,498 persons unemployed. If I was unemployed, wanted to work, and I saw the bullish numbers about manufacturing, I know what I would do. Career benefits for Precision Machining Career Training
Photo Credit: StealingFaith
“The August PMI® is led by the highest recorded New Orders Index since April 2004 when it registered 67.1 percent. At the same time, comments from the panel reflect a positive outlook mixed with caution over global geopolitical unrest.”
The ISM PMI index for Manufacturing in the United States has been a good leading indicator for US GDP. We like to calibrate our Precision Machining Industry’s performance against it as well.
Our July PMPA Business Trends Report showed that our industry outperformed several FED manufacturing indicators. Our July Sales usually low because of summer shutdowns, vacations and retooling in Customer plants, were at the average for the Calendar year. today, ISM PMI shows that that positivity extending to August.
Today’s report from Institute for Supply Management showed the indicator rose 1.9 percent to 59 in August from 57.1 in July. This is a very optimistic reading, showing that the manufacturing economy expanded for the 15th consecutive month.
What does a bull sound like for prospects in manufacturing?
“This month’s PMI® reflects the highest reading since March 2011 when the index registered 59.1 percent. The New Orders Index registered 66.7 percent, an increase of 3.3 percentage points from the 63.4 percent reading in July, indicating growth in new orders for the 15th consecutive month. The Production Index registered 64.5 percent, 3.3 percentage points above the July reading of 61.2 percent. The Employment Index grew for the 14th consecutive month, registering 58.1 percent, a slight decrease of 0.1 percentage point below the July reading of 58.2 percent. Inventories of raw materials registered 52 percent, an increase of 3.5 percentage points from the July reading of 48.5 percent, indicating growth in inventories following one month of contraction. The August PMI® is led by the highest recorded New Orders Index since April 2004 when it registered 67.1 percent. At the same time, comments from the panel reflect a positive outlook mixed with caution over global geopolitical unrest.” -Bradley J Holcomb, Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee.
PMPA Business Trends data for July has also painted a picture of stronger than seasonally expected performance. We can hardly wit to see how the PMI August Data compares to our industry performance.
Institute for Supply Management’s December 2011 PMI increased 1.2 percent over November, coming in at 53.9. This is the 31st consecutive month of expansion in the manufacturing sector. Manufacturing is still expanding according to this indicator.
Facts like these ISM Numbers support our continued belief that manufacturing continues to lead the recovery and is the place to be if you are looking for a career. Otherwise, facts supporting this bullish attitude are hard to find, until our end of the month figures show up.
The ISM numbers showed Fabricated Metals, of which Precision Machining is a sub-sector, to report decline or contraction in December.
New Orders, Production, Employment, Prices, Order Backlog, Exports and imports all grew in December according to ISM.
Supplier deliveries remained the same, while inventories fell by 1.2 percent, and Customer Inventories fell by 7.5 %.
The drop in Customer Inventories is a signal that our order books will be picking up in the first quarter of 2012.
Pricing of raw materials remains highly uncertain, with respondents reporting both increasing and decreasing prices for Aluminum, Plastic, and Steel.
Why are you bullish about manufacturing? Do you feel like a bull with a blindfold?