Fabricated metals and primary metals were two of the 11 manufacturing segments reporting growth in December 2011 according to the latest ISM Report on Manufacturing. 

Seems like Santa had been working out!

Our precision machining industry makes the highly engineered precision components that enable the technologies embedded in manufactured products.
Manufacturing is responsible for approximately 12 % of GDP.
The PMI registered 57 in December, indicating a continued expansion in Manufacturing. December was the 17th consecutive month of manufacturing expansion according to ISM.
We believe that the ongoing US Manufacturing expansion, when coupled with the economic expansion in Brazil, India and China, indicates a year of high variability in prices for raw materials needed for producing precision parts. Brass, steel, stainless steel, prices of these are likely to swing wildly as inventories remain low and demand registers episodically and news distracts the market.
We are pleased to see manufacturing continue its expansion in the US, but are keeping in mind the challenges that many shops will face as they try to purchase materials  not available from stock for orders with immediate due dates.
A better problem to have than we had in the fourth quarter of 2008…
Have you noticed availability issues in certain materials?
Have you noticed unseasonably strong orders or sales in the final quarter of 2010?
Photo
Share

The December ISM Purchasing Managers Report confirms that manufacturing continues its recovery and growth – the PMI was up 2.3 points to 55.9%.
 “The manufacturing sector grew for the fifth consecutive month in December as the PMI rose to 55.9 percent, its highest reading since April 2006 when it registered 56 percent. This month’s report is quite strong as both the New Orders and Production Indexes are above 60 percent. The sector may be benefiting from an excessive destocking cycle as indicated by the recent performance of the Customers’ Inventories Index. Customers’ inventories have been ‘too low’ for nine consecutive months, and this month’s index is the lowest reading since the inception of the index in January 1997. Overall, the recovery in manufacturing is continuing, but there are still some industries mired in the downturn as evidenced by the seven industries still in decline.”
Fabricated Metal Products (NAICS 332)*  is one of those  seven industries “still mired in the downturn.” In December  the fabricated metals respondents reported decreases in  backlog,  employment,  customer inventories, and lower prices for materials. On the bright side, both production and  export orders grew for this sector in December 2009.

Fabricated metals may not be out of the woods yet, but...

We may not be out of the woods yet as an industry,   but the sustained low employment and low customer inventories for our industry tell me that the overtime production machine will be gearing up and starting to hum for many of our shops this month.
Bottom Line: Dr. Ken Mayland of Clearview Economics had this to say about the ISM Composite Report for December:
“…if the current reading were to be sustained, that would be consistent with 4.6% real GDP growth.  Folks: that’s “good” growth!”
* Precision Machining  Industry is NAICS 332721, and thus a segment of Fabricated Metal Products Sector.
Share