April ISM PMI 57.3- Solid Report

May 1, 2018

Despite a drop of two points from 59.3 to 57.3, the April Institute for Supply Management Purchasing Managers Index (ISM-PMI) indicated continued solid, but slowing growth in the manufacturing sector. Of the 18 Manufacturing Industries, 17 reported growth in April. Demand remains robust, but the nation’s employment and supply chains continue to struggle- April 2018 ISM PMI, Timothy Fiore, Chair, ISM Manufacturing Business Survey Committee.

The April report noted declines in other indexes such as New Orders (down 2 points); Production Index (down 3.8 points); New Orders down 0.7 points); and he Employment index (down 3.1 points) compared to March. Prices  index was up 1.2 percent  from prior month, indicating the 26th consecutive month of gains.

The prices index is currently at its highest value since April 2011; 17 of 18 industry sectors reported price increases.

108th consecutive month of expansion for the overall economy according to ISM PMI for Manufacturing.

What is going on in manufacturing? Here are  a couple of comments from some of the ISM’s respondents:

  •  “Business is off the charts. This is causing many collateral issues: a tightening supply chain market and longer lead times. Subcontractors are trading capacity up, leading to a bidding war for the marginal capacity. Labor remains tight and getting tighter.” 
  • “[The] 232 and 301 tariffs are very concerning. Business planning is at a standstill until they are resolved. Significant amount of manpower [on planning and the like] being expended on these issues.”
  • “The recent steel tariffs have made it difficult to source material, and we have had to eliminate two products due to availability and cost of raw material.

PMPA’s March Business Trends Report just came in and showed a record high at 143 for sales. We look forward to seeing what our April report has in store.

Chart courtesy Calculated Risk Blog

ISM April PMI Report

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In Like A Lion- March Business Trends Index Sets New Record

April 27, 2018

With 91 companies responding, the PMPA Business Trends Index for March 2018 increased 14 points or 10.8% over
February to 143, the highest value for the Business Trends Index EVER! At 143, the index is up 11.2 points or 8.5%
above the five-year average for the March sales index of 131.8. ”  – PMPA March 2018 Business Trends Report

All time high for Our Sales Index!

Sentiment indicators from our respondents remained high. PMPA members can get the full report here. Press can request a copy  – we’ll be happy to share.

Two of three months  in 2018 have set new records for sales. Our industry is outperforming five year averages by wide margins- up 8.5% for March.

Prospects for employment remain high in our shops, even as the national figures tout “full employment.”

If you know someone that is underemployed, or unemployed, the prospects for great careers in our precision manufacturing shops have really never looked better.

 

Lion

March 2018 PMPA Business Trends Report

Great Careers


January Sales Record for Precision Machining

February 22, 2018

The PMPA Business Trends Index for January 2018 jumped to 135, up 25% over December 2017, and up 5% over January 2017. This is up 8.9% over the five year average for January Sales, and is our highest January on record.

January Sales Index up 25% over December, up 8.9% over 5-year January Average

Change your thinking to thrive to this new market.

Cheap inputs that cost your shop capacity are no bargain, when there are no shops scheduling less than 40 hours and 71% of shops are scheduling overtime.  It is all about UPTIME in this current market. There are no bargains worth having that cost you uptime.  And that means training your people is essential as well.

What we are hearing “falling behind…exceeded forecast by 10%…Can’t get it out quick enough…Picking which jobs to run…” Almost three quarters of shops reporting (74.3%) reported sales increases up by ten percent or more in January.

 The Fed reported that Industrial Production (IP) “edged down 0.1 percent in January following four consecutive monthly increases. Manufacturing production was unchanged in January.” Our industry is clearly a leading indicator for IP- they cannot make it until we produce the precision components needed.

Last January we said that “…the animal spirits have escaped confinement and are driving the manufacturing economy to performance not seen in years.” Last month we reported that industry sales “were up 6.8% for the year, a multiple of GDP growth. 

This report for January 2018 shows that our responding shops are outperforming the five-year shipments average for the month of January by almost 9%.

Our Lead Time indicator suggests that some shops are starting to think about capacity constraints.  Strong sentiment for profitability tells me that no one is “buying” business by cutting margins. Our Employment indicator recognizes that to continue production at these levels, we need to add talent.  Our performance and sentiment indicators this month justify our optimism about the markets and employment prospects for our precision machining industry in this New Year.

It is all about UPTIME in this current market. Cheap inputs that cost your shop capacity are no bargain. Change your thinking to thrive to this new market.

PMPA January 2018 Business Trends Report

Fed  January 2018 Industrial Production Report


A New Era Began Today

February 6, 2018

Autonomy in our technology is real! (Photo courtesy Joshua Andrade- Heinlein Forum on Facebook)

I was privileged to be able to witness the live cast of the Falcon Heavy Lift vehicle today. The photo above shows two booster engine modules simultaneously and autonomously landing. This was just a small part of the technology displayed today by the Falcon Heavy launch.

But here is why I say that a new era starts today:

  1. This is proof that Autonomy in our technology is real. It’s no longer about listening to a reporter somewhere talking about autonomous cars on test tracks. We got to see it ourselves today. It works. Now, it’s just a matter of scaling and networking the technology. We’ll be seeing this in our customers products sooner than we expected.
  2. Private enterprise for the win. NASA’s Bill Gerstenmaier, Associate Administrator for Human Exploration and Operations said that “the NASA SLS (Space Launch System) heavy rocket would cost about $1 billion per launch.” The Falcon Heavy cost is about $90 million per Launch. That’s about $910,000,000 in unneeded taxes per launch.
  3. Today’s launch has proven that the existential joy of engineering is alive and well and making cost effective technology in private enterprise. Space is no longer limited to staid, bureaucratic, rationalizations that it is for research for the common good missions. Today, it is about the human spirit and what we can achieve.
  4. This was not cobbled together by the lowest bidder with a bunch of imported parts. Although the label on a circuit board proudly proclaims “*Made on Earth by humans” this is validation of the capability of US private enterprise, engineering, and the entrepreneurial equivalent of  the gold record on Voyager.
  5. This is the defining event of the new renaissance of Engineering, Entrpreneurialism, and Manufacturing to further mankind’s material progress.  Through our own capable efforts.

Made on Earth by humans (Photo courtesy Joshua Andrade)

I am glad to be a witness to this milestone in the renaissance of manufacturing, engineering, and entrepreneurial accomplishment here in America today.  An electric car, is on its way to Mars. I watched two booster engines land themselves simultaneously. I watched the joy of the engineers as their work accomplished its demonstration of the power of our technology. This is the current generation’s SPUTNIK moment.

Baby boomers can just barely remember what Sputnik did  to transform for our culture, but many of us chose science and engineering and technology careers.  Today, we all had the chance to see a similar watershed for technology, manufacturing, and entrepreneurial spirit, and that it is cool again.

Existential Joy of Engineering- Why shouldn’t we love what we do?

The existential joy of engineering is alive and well, and it has just sent a red car hurtling towards a rendezvous with the red planet.

Red car to rendezvous with a red planet

 

…to be continued

Link to video Space X Falcon Heavy Launch– start at 4:14:24 to start with the launch

Photocredits: for Landing and Circuit board: Joshua Andrade (J Meauho Andrade on Facebook)


January ISM PMI Growth in Manufacturing Moderates as it Continues

February 1, 2018

Positive indicators for our precision machining shops from ISM and PMPA.

According to today’s release of the January 2018 Institute for Supply Management -Purchasing Manager’s Index,  economic activity in the manufacturing sector expanded in January, although at a slower rate than in December 2017. The  January PMI came in at 59.1%, down 0.2% from 59.3% in December. 

Continued strength in Manufacturing according to the nation’s Purchasing Managers at the Institute for Supply Management.

 

A reading above 50 percent in the PMI  indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

While the ISM-PMI report highlighted slight declines in the following indicators for our manufacturing businesses, they still bode well for manufacturing’s strength:

  • The New Orders Index registered 65.4 percent, a decrease of 2 percentage points from the seasonally adjusted December reading of 67.4 percent.
  • The Production Index registered 64.5 percent, a 0.7 percentage point decrease compared to the seasonally adjusted December reading of 65.2 percent.
  • The Employment Index registered 54.2 percent, a decrease of 3.9 percentage points from the seasonally adjusted December reading of 58.1 percent. The Supplier Deliveries Index registered 59.1 percent, a 1.9 percentage point increase from the seasonally adjusted December reading of 57.2 percent.

Other comments from this report that convey positivity for our sector including “expanding business conditions, with new orders and production maintaining high levels of expansion; employment expanding at a slower rate; order backlogs expanding at a faster rate; and export orders and imports continuing to grow faster in January. Supplier deliveries continued to slow (improving) at a faster rate. Price increases occurred across all industry sectors. The Customers’ Inventories Index indicates levels are still too low. Capital expenditure lead times increased 8 percent during the month of January.” These all signal that manufacturing continues to be very busy up and down the supply chain. The “Customer’s inventories  being too low,”  comment tells me that there will continue to be strength in  demand for manufactured goods in the coming months.

PMPA’s own Business Trends Report for December 2017 and year end summary reported that our companies’ sales were up 6.8% over calendar year 2016’s levels. This  January ISM PMI report continues the positive outlook for manufacturing. PMPA Year End Summary Blog Post

ISM Press Release

Calculated Risk Chart of January 2018 ISM PMI

 

 

 

 


Precision Machining Industry Sales Up 6.8% in 2017

January 25, 2018

Our December PMPA Business Trends Report for December 2017 finished at 125 for the year, up 6.8% over last year’s 117. 

It has been a great year for our precision machining shops, and “Busy” is the watchword.

Our industry sales increased over twice the US GDP growth reported by BEA for 2017!

Our sentiment indicators for the year ahead were positive as well.

PMPA members can read the full report here 

By the way, we predicted in May that our year end sales level would be 126.25- an error of just 1.25% from the actual value of 125!

Press representatives desiring a copy of the report please contact mkirchenbauer@pmpa.org  to get a copy of the full report or to arrange an interview.

We are confident that 2018 will be a similarly strong year  for our industry- starting in 1st quarter where our indicators are all strongly positive.-Net Sales, Lead Times, Employment and Profitability.

Photo credit


December ISM PMI Increased In December!

January 3, 2018

A very strong report for Manufacturing in December according to the ISM PMI.

“The December PMI® registered 59.7 percent, an increase of 1.5 percentage points from the November reading of 58.2 percent. The New Orders Index registered 69.4 percent, an increase of 5.4 percentage points from the November reading of 64 percent. The Production Index registered 65.8 percent, a 1.9 percentage point increase compared to the November reading of 63.9 percent. The Employment Index registered 57 percent, a decrease of 2.7 percentage points from the November reading of 59.7 percent. The Supplier Deliveries Index registered 57.9 percent, a 1.4 percentage point increase from the November reading of 56.5 percent. The Inventories Index registered 48.5 percent, an increase of 1.5 percentage points from the November reading of 47 percent. The Prices Index registered 69 percent in December, a 3.5 percentage point increase from the November reading of 65.5 percent, indicating higher raw materials prices for the 22nd consecutive month. Comments from the panel reflect expanding business conditions, with new orders and production leading gains...”- Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee

So much for Seasonality! So much for Q4 Slowdown!

A very strong showing for December!

The December 2017 value is up 5 points or 10% from last December’s reported value.

We continue to find multiple positive indicators for manufacturing strength.

If you are sitting on the sidelines in today’s economy, we respectfully suggest that you bring your talent to manufacturing.

PMPA’s latest Business Trends Report showed that sentiment in our shops for Employment was quite positive and strong:

Employment: Ninety-seven percent of respondents expect employment prospects to remain the same or
increase in our industry over the next three months-despite seasonal factors! Our industry continues to hold
very positive prospects for employment.”

Chart courtesy Calculated Risk Blog

Institute for Supply Management PMI December 2017 Press Release