The PMPA Business Trends Index for May 2014 increased 5 points over both April 2014 and May 2013. Our industry continues to show solid sales in 2014.

May 2014's 128 value is just one point shy of our highest ever value of 129.
May 2014’s 128 value is just one point shy of our highest ever value of 129.

The May 2014 PMPA Business Trends Report shows strong levels of sales and increase in hours scheduled. Forward looking sentiments for Lead Times, Profitability, and Employment do not show the same level of strength.
Weakening Lead Time sentiment in particular is an issue to keep in mind.
While we show positive levels of hours worked, shipments, overtime and profitability, each of these indicators has softened to a less bullish level than in the first quarter.
Our indicators suggest perhaps moderation in demand for our products in the months ahead.

See the full report here.

The PMPA Business Trends Report for September 2013 shows our sales /shipments index to be down  to 115 for September, up 12 points over September 2012, but down 9 points from last month,Sept Bus Trends Graph
Outlook for sales and employment remain high, and sentiments for profitability remain positive.
81 % of respondents felt sales would remain the same or increase over the next three months.
This positivity in the face of an actual decline in shipments for most respondents is a sign that the variability seen is expected, rather than a harbinger of a more drastic slowdown industry wide.
You can download a copy of the Sept. Business Trends Report Here
By the way, over one third of respondents were scheduling 45 hours or more of overtime…

There is a lot of uncertainty in the press about the economy and a lot of fear among businessmen regarding the near term for their business. Here are 5 reasons why I am bullish on  the Precision Machining Industry’s prospects for the balance of 2012.

5 Reasons!
  1. Institute for Supply Management (ISM) Purchasing Manager Index (PMI) for April rose to 54.8 an increase of 1.4 points. If sustained this would indicate an approximate 4.1% real growth in GDP. Precision machined components are vital components in all facets of industry and so would reflect that GDP growth.
  2. The World Steel Association (Worldsteel) just released its April 2012 Short Range Outlook (SRO) for 2012 and 2013. Worldsteel forecasts that global apparent steel use will increase by 3.6% to 1,422 Mt in 2012, following growth of 5.6% in 2011. In 2013, it is forecast that world steel demand will grow further by 4.5% to around 1,486 Mt.
  3. “According to USMTO, February machine tool sales were 2,063 units. This was 23.5% more than February 2011, which was the highest one-month rate of change since September 2011. On an annual basis, unit sales continued to see slower growth, but that rate of growth (33.5%) is still historically high… While the rate of growth in machine tool sales is bound to slow, the leading indicators are strong enough that it looks like machine tool sales should be good throughout 2012.”- Steve Kline Jr, Latest email
  4. “Future business expectations remain strong. The index showed metalworking facilities are slightly more optimistic about their business than they were last month. This continues the trend of improving business expectations that began in October 2011. Finally, since September 2011, the average spending on metalworking equipment for the next 12 months has improved. This indicates that machine tool sales should remain strong for at least the next quarter or two.” Modern Machine Shop MBI
  5.  Real personal consumption expenditures increased 2.9 percent in the first quarter, compared with an increase of 2.1 percent in the fourth.  Durable goods increased 15.3 percent, slowing from the fourth quarter’s 16.1% increase. – BEA

Anecdotally PMPA’s Business Trends Reporting sentiment indicators are strongly positive. We’ll have the index, and our prediction for the end of year average in about two weeks.

The companies that are still here today have already made the adjustments needed to be sustainable.
Since these businesses have a sustainable foundation, they will further improve productivity and profitability as their managers focus on operational issues.
It is also much easier to deal with customer pushback on price when the order at hand is not a make or break the company issue.
Not being as distracted by ‘existential issues’ should unleash a lot of management ideas for improvement of operations.
And give sales the courage to not accept orders that fail to reward companies for their invested capital.
Why are you optimistic about the outlook for precision machining?