Our July 2010 Business Trends Report provides hard data that the precision machining industry is maintaining “A New Normal.”

Sales index down 10 points outlook for next 3 months positive.

The three month outlook for sales, lead time, employment and profitability are all quite positive as our industry passes the fourteenth month above the May 2009 low.
We are encouraged that our index did not drop further in July, a seasonally weak month for our industry.
Average length of first shift is up to 43.1 hours, more than 5 hours above the 2009 average.
94 percent of participating shops expect profitablity to remain the same or improve.
Those expecting sales to remain the same or increase made up 90% of our respondents.
The last shop owner I spoke with said that he was “Busier than heck and can’t ship parts fast enough.”
We suspect that part of his problem is getting the raw materials and tooling that he might need when he needs it…
How about you? Are you busier than heck? Are you still in the range we are calling the New Normal?

 PMPA’s Index of Sales of Precision Machined Products rose to 85, the  highest value for the year. This is an increase of 30.8% in the Sales index compared to the 2009 low of 65 in May for the 96 companies reporting this month.   Our industry  sales  continue to recover.

Five consecutive months of growth in sales. And high for the year.

Reason for optimism:  October marks the fifth month in a row of increasing sales in the precision machining industry. The three month moving average crossed the 12 month moving average. For our industry, this data shows that recovery is underway. Thirty-four percent (34%) of participating shops reported double digit sales increases in October. 
Sales Outlook: The percentage of respondents who felt that sales would decline over the next three months was almost equal to the percentage that thought sales would be up, (25% vs. 26%) with 48% expecting sales to remain about the same. The outlook for sales in the short term has stabilized.
Our report for October 2009  confirms that the sales of the precision machining industry are recovering.  The percentage of respondents showing positive sales growth, the three month  moving average for sales crossing the 12 month moving average for sales,  five consecutive months of improved sales, and the rise of the sales  index by 30.8% over the year’s low  in May are strong and positive indicators of sales recovery.
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The August 2009 PMPA Business Trends Report increased to 73 in August up 3 points from July, up 4 points from June, and up 8 points from the May 2009 low of 65.  Three months in a row of upward movement!

"Only three months in a row of non negative sales growth"
"Only three months in a row of non negative sales growth"

Three consecutive months of improvement. Or as one of my more pessimistic colleagues puts it, ” three consecutive months of sales not getting any worse.
We’ll prefer our positive optimism to living in his dreary outlook anyday.
Here are our latest reasons we believe that the precision machining industry has begun its recovery based on approximately 100 members participating in our monthly PMPA Business Trends Report.

  1. Three consecutive months of sales increases.
  2. Over half  52% of respondents reported sales increases, and one third reported double digit sales increases.
  3. Average length of first shift climbed again to 38.2 hours. 
  4. 63 % of responding companies reported 40 hour or more average length of first shift.

The shops reporting serve the Medical, Automotive, Aerospace, Heavy Machinery, Truck, Construction Equipment, Food Service Equipment, and Military Markets.
PMPA members can see the latest Business Trends Report here.
Bonus good news  about the economy from the Fed Open Market Committee per  an email from Dr. Ken Mayland, Clearview Economics:
“…economic activity has picked up…” versus last meeting on 8/12: “…economic activity is leveling out.”  Yeah!  The economy is now recovering (not recovered).
Picture credit : http://www.itsallabouteeyore.awoodman.net/