Tag: ISM Manufacturing

Demand Drives May 2012 Precision Machining Industry Sales

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Despite the declines reported for May 2012  in both the  ISM Purchasing Managers Index for Manufacturing and Industrial Production (IP),  PMPA’s Business Trends Sales Index is once again back at its peak of 127.

This is an increase of 9 percent over April, up 8 percent over last year’s average, and up 7 percent compared to same year to date last year.

Strong Demand for Precision Machined Components!

PMPA’s Business Trends Sales Index shows a strong continued demand for the products of the precision machining industry.

PMPA Business Trends Report

The ISM Manufacturing PMI decreased modestly from 54.8 percent to 53.5 percent in May 2012, contrasting to our index’s gain. Industrial Production (IP) also slipped 0.1 lower in May, as Manufacturing Activity contracted 0.4%. (Note: Manufacturing Activity is actually up 5.2% on a year over year basis.)

The 3 month moving average (3MMA) for PMPA’s Business Trends Index of Sales remains above the 12 month moving average (12MMA).

We are strongly optimistic about prospects for manufacturing knowing the role our industry’s production plays as supplier of critical componentry in manufactured goods.

 How is your shop doing? Are you getting your share of the Industry’s unexpectedly strong sales?

How do you reconcile this to all the doom and gloom we hear on the news?

Reasons We Are Optimistic For Precision Manufacturing in 2012

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The pundits lately are all increasingly pessimistic about manufacturing these days. Industry Week, NFIB, Bloomberg.

Please ignore the negativity in the press, we have some positive data to share.

The PMPA Business Trends Index was reported to be 125 in March, up 6 points from February.

PMPA members can access the current report here. (Accredited media can contact mfree(at)pmpa.org to receive a copy.)

Compare that to March ISM report which showed manufacturing up just 1 percentage point.

Why we are excited about prospects for manufacturing in 2012:

The correlation coefficient for our first four months of the year sales  to the end of the year average is 0.958.

If you don't know what correlation coefficient means, ask a Statistics Professor.

As the graph below shows for the years from 2003 to 2011, the blue line is the average of our Index for the first four months of each year; the red line is the Shipment Index’s year end average.

It looks like our Index's average of shipments for the year could be around 123.

Last year’s average was 113 ( 2000, 2010= 100). Our current look (three months data) could be that  precision machined products manufacturing in 2012 is up 10% from last year.

Our products are embedded as components in practically all manufactured goods- automotive, aerospace, off road, heavy truck, agriculture, food service, appliances, munitions.

Our data strongly suggests that suppliers who are fixated on fear, uncertainty, and playing defense may be doing a far greater disservice to their company’s performance this year than any external factors.

What are you doing to help assure that your company is prepared to deliver a possible 10% greater sales performance in 2012 than you did in 2011?

After all, it’s not really about our numbers.

It’s about how you manage your business.

Our  Business Trends Index numbers suggest you should be managing for growth!

Ignore the negative_pundits behind the curtain

Statistics Professor (Ben Stein)