Strong Optimism Arrives in January ISM-PMI

February 2, 2017

Manufacturing had a very strong January according to ISM-PMI  and as forecast by PMPA Business Trends respondents in our December Report.

 

Up up and away

Up up and away! Growth in Manufacturing sector and the broad economy continues.

Manufacturing expanded in January as the PMI® registered 56 percent, an increase of 1.5 percentage points from the seasonally adjusted December reading of 54.5 percent, indicating growth in manufacturing for the fifth consecutive month. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting. A PMI® above 43.3 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the January PMI® indicates growth for the 92nd consecutive month in the overall economy, and indicates growth in the manufacturing sector for the fifth consecutive month.”– Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee.

The PMPA’s Business Trends Summary and Forecast for December 2016 showed our shops believing that Projected Net Sales in the first quarter of 2017 would be up substantially. Look at the slope of the Blue Line on the chart below.

Sentiment for Sales up sharply for first three months of 2017.

Sentiment for Sales up sharply for first three months of 2017.

We are pleased that the ISM-PMI confirmed our member sentiment expectations for a very strong January. We also hope that you are taking advantage of these opportunities, rather than remaining trapped in “hunker- down” thinking.

Why are we so positive? Bradley Holcomb explains:

 “The past relationship between the PMI® and the overall economy indicates that the PMI® for January (56 percent) corresponds to a 4 percent increase in real gross domestic product (GDP) on an annualized basis.” 

Our industry provides the essential componentry that empowers the functionality of all of those big ticket items that make up so much of GDP- Light vehicles, Aircraft and aerospace, Appliances, Agriculture and Construction equipment, etc, etc.

You will be busy in first quarter of 2017. Our members said so. ISM-PMI confirms it was so in January.

Share your positive optimism and expectations with your team. It is a great way to start a new year.

Postscript: Employment Outlook. In PMPA’s December Business Trends Report, the outlook for Employment was 92% favorable to employment remaining level or increasing. Only 8 % of respondents felt a decline in employment was  foreseeable.

The ISM Employment  Index “registered 56.1 percent in January, an increase of 3.3 percentage points when compared to the seasonally adjusted December reading of 52.8 percent, indicating growth in employment in January for the fourth consecutive month. An Employment Index above 50.5 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.”

It  is clearly a great time to consider a great career in Precision Machining and manufacturing!

Thanks to Calculated Risk Blog for their Chart of the ISM PMI.

 

 

 

 


Precision Machining Industry 2017 Forecast- Strongly Positive

January 30, 2017

PMPA’s December 2016 Business Trends Review and Summary showed our Industry shipments declined about 3.3% year over year. The index fell to 117 (Just 0.6 below the trailing five year average!) but down from 2015’s 121.

That was last year. What does 2017 look like for our precision machining shops?

Sentiment for Sales up sharply for first three months of 2017.

Expectations for Sales of Precision Machined Products are  up sharply for first three months of 2017.

 

According to PMPA’s Business Trends Report: Net Sales outlook for precision machined products exploded in this month’s survey with fifty-four percent of respondents expecting sales to increase in the first three months of 2017, and thirty-eight percent  expect sales to remain level.  Ninety-two percent of our shop respondents expect sales to remain level or increase in the next three months. All other sentiment indicators were positive as well: Lead Time, Employment, and Profitability.

PMPA members get the Business Trends Report monthly to help them calibrate to sales, hours scheduled, and outlook for Sales, Lead Time, Employment and Profitability of their peers.

What indicators do you use to make sense of the market  each month?

 


EU Commission- RoHS Exemptions Delayed Again

January 24, 2017

The current exemptions for Lead in work piece materials for our shops will remain in effect and will not expire until the EU Commission completes the current ongoing review of the applications.

They can fly the flags, but getting regulatory decisions on time is not something the EU commission does very well.

They can run the flags up the flagpoles on schedule, but getting regulatory decisions on time is not something the EU Commission does very well.

According to Electronics Industry Portal I-Connect007,  the EU is unlikely to publish  the RoHS exemptions any time soon. Apparently the EU Commission only got around to reviewing the requests last month.  December 15, 2016. December 2016!

And they are only now in the process of preparing draft legislation to be sent to the member states for consideration later this year.

Later this year!

Bottom Line for your precision machining shop and your customers:

  • A decision on the RoHS exemptions of interest to the precision machining industry is unlikely to be made until Fall of 2017.
  • The current exemptions for Lead as an alloying element in steel, Lead as an alloying element in aluminum, Lead as an alloying element in copper will remain in effect and will not expire until the EU Commission completes the current ongoing review of the applications.

Here’s the full statement from I-Connect007

“The EU Commission and Member States continue to meet to discuss the disposition of RoHS exemption renewal requests submitted by industry in January 2015.  During their December 15, 2016 meeting in Brussels, the experts reviewed requests on: Lead as an alloying element in steel (Annex III exemption 6a); Lead as an alloying element in aluminum (Annex III exemption 6b); Lead as an alloying element in copper (Annex III exemption 6c); Lead in high melting temperature type solders (Annex III exemption 7a); Lead in a glass or ceramic other than dielectric ceramic in capacitors (Annex III exemption 7c-I), jointly with exemption request 2015-1; Lead as activator in the fluorescent powder (Annex III exemption 18b), jointly with exemption request 2015-3; Lead in solders for the soldering to machined through hole discoidal and planar array ceramic multilayer capacitors (Annex III exemption 24); and Lead in cermet-based trimmer potentiometer elements (Annex III exemption 34).

“The Commission is currently working on preparing the draft legislative proposals for these and other exemptions) which will be sent to Member States for written consultation.  The drafts will likely be published in the spring; final legislative acts could be published in the Official Journal of the EU (OJEU) in the fall at the earliest. Under the EU RoHS2, all existing exemptions were set to expire by July 21, 2016. However, all exemptions for which industry submitted a renewal application will not expire until the EU Commission completes the current ongoing review of the applications.”

I-Connect007

(PS. Interesting footnote, I searched for an image of the European Union Commission and found the one above-on a blog about the EU Commissions delay to decide on a VISA issue– last April. Not an isolated case of Bureaucratic delay!)

Photo credit: Pulse Blog


RoHS Exemptions for Machining Industry- PMPA Members Know

January 12, 2017

The EU decision on the  RoHS 2011 recast appeals for exemptions for leaded materials for machining is almost a year late- the decisions were due  from the commission January 21, 2016.

January 21, 2016!

rohs-word-cloud

PMPA has reviewed the findings of the study group assigned to review and report on the appeals regarding Lead for machining purposes in Steels, Aluminum, and Copper alloys.

If you are a PMPA member, you can get our summary  providing the latest status of the RoHS exemptions that affect our shops. The EU is almost a year late with their decision on the exemption appeals for leaded materials for machining under the latest (2011) RoHS recast.

PMPA has posted a summary of the consultants’ findings  and their potential impacts on our machining companies for our members information on the PMPA website here.

We have really been challenged by the EU to stay up to date on these exemptions, being almost a year late with the decision certainly keeps the uncertainty high for manufacturers.

I wonder if the European Commission is as  lenient with the deadlines on the regulated communities as they are for their own?

If you are a PMPA member, you can get the latest Status of the RoHS exemptions that affect our shops here : January 2017 RoHS Exemption Summary Report

If you are not a PMPA member, where do you go to stay up to date on regulatory issues that affect your business?


December ISM PMI Positive Bellwether for 2017

January 5, 2017

The Institute for Supply Management announced on Tuesday that its Purchasing Manager’s Index (PMI) for Manufacturing index rose 1.5 percentage points to 54.7 in December, its highest level in two years and up from 53.2 in November.

This is great news- let’s look at some details to find out why:

  • New Orders component– new orders rose 7.2 percentage points to 60.2 – their highest level since November 2014
  • Strength in Employment component– employment rose 0.8 percentage point to 53.1 – the highest since June 2015
  • And strength in the Production component-production improved to 60.3- very unusual outcomes for Manufacturing in December.

This is an unexpectedly solid report showing Manufacturing industry performance stronger in December than in November.

Highest in 2 years and up 1.5 points over November 2016

Highest in 2 years and up 1.5 points over November 2016

Here is why we see this as a bellwether for a great 2017 for our precision machining companies.

  • U.S. Light Vehicle (Auto) Sales set annual sales record according to the Wall Street Journal and reports we heard from online videos from AUTO NEWS. “A total of 17.55 million vehicles were sold in 2016, roughly 60% of which were classified as light trucks” according to the Wall Street Journal.
  • 2016 sales volume was up ~ 700,000 light vehicles, according to reports from Auto News
  • The average age of the U.S. Light Vehicle Fleet in 2016 was a record 11.6 years, According to Statista online, 

There is still plenty of reason to expect demand for light cars and trucks to be sustained based on the average age of the U.S. Fleet and the current low unemployment rate reported by the Federal government. Knowing that Automotive is the precision machining industry’s most heavily served market convinces us that these numbers reported by ISM, WSJ, Auto News and Statista bode well for our precision machining shops in 2017. I hope that you are preparing for success, not for hunkering down in 2017.

Happy New Year, indeed!

Auspicious!

Auspicious!

 

Link to ISM December 2016 report

Statista Age of Light Vehicles in U.S.

Calculated Risk December ISM Post and Chart


Making a List and Checking It Twice

December 22, 2016

What’s on your list? Lists?

Holidays provide a great time for reflection. Santa checking his list started me thinking…

Didn't know that Santa was into over-inspection

As a quality guy, I didn’t know that Santa was into over-inspection

Here is our list of “to be given”

  1. To our customer’s- Zero Defects, 100% on time, delightful answers and best in class service
  2. To our suppliers- Sufficient lead time and clear requirements on the specification and purchase order.
  3. To our employees- Sincere appreciation and offers of further training
  4. To our community- Continuing to be great citizens and networking

And our “Wish List”

  1. From our customers- Orders with sufficient lead times and clear specifications
  2. From our suppliers- the same treatment that we give our customers
  3. From our employees- attention to safety and their best efforts
  4. From our community- respect for the magic that our people and processes accomplish that makes a difference in everyone’s lives.

What’s on your list?

Need help with creating and using lists? There’s a great book for that:

Maybe a great gift Idea for some of your key performers...

Maybe a great gift Idea for some of your key performers…

Checklist Manifesto Amazon

Savage Chickens


ISM PMI Manufacturing Report for November 2016

December 5, 2016

The November ISM PMI Manufacturing Index rebounded by 1.3 points in November. A welcome development as we near year end.

Rebounds are especially important in the finals...

Rebounds are especially important in the finals…

The composite index rose from 51.9 in October to 53.2 in November, its third straight month of expansion. The  manufacturing production  index, up from 54.6 to 56.0 in November expanded at its fastest rate since July 2015.

According to Bradley Holcomb at ISM,“The November PMI® registered 53.2 percent, an increase of 1.3 percentage points from the October reading of 51.9 percent.”

Rebound!

Rebound!

We’ll take it!

Fabricated Metal Products, of which Precision Machining is a sub sector, was one of 11 industries that grew in November. according to ISM data.

Both ISM’s Production Index and New Orders Index also reported gains in November.

PMPA’s Business Trends Index was down 1.7 % in October, so we are looking forward to our own rebound in November… after all, our components are what makes the manufactured goods sold in November actually work…

Link to ISM PMI November Report

Link to Calculated Risk Graph

Rebound: Showing some love to our Chicago Readers… Jordan Rebound 1995-1996 Finals

PMPA Business Trends for October 2016