PMA Predicts Business to Improve

According to the February 2012 Precision Metalforming Association (PMA) Business Conditions Report, metalforming companies predict a spik...


According to the February 2012 Precision Metalforming Association (PMA) Business Conditions Report, metalforming companies predict a spike in business conditions during the next three months. Conducted monthly, the report is an economic indicator for manufacturing, sampling 138 metalforming companies in the United States and Canada. The February report shows that 51 percent of participants expect economic activity to improve during the next three months (up from 41 percent in January), 45 percent predict that activity will remain unchanged (compared to 54 percent last month) and only 4 percent report that activity will decline (down from 5 percent in January). Metalforming companies also anticipate a slight improvement in incoming orders during the next three months, with 56 percent forecasting an increase in orders (up from 51 percent in January), 33 percent expecting no change (compared to 40 percent last month) and 11 percent predicting a decrease in orders (up from 9 percent in January).

Average daily shipping levels rose significantly in February.  Forty-five percent of participants report that shipping levels are above levels of three months ago (up from 30 percent in January), 45 percent report that shipping levels are the same as three months ago (compared to 48 percent last month), and only 10 percent report a decrease in shipping levels (compared to 22 percent in January). The percentage of metalforming companies with a portion of their workforce on short time or layoff dropped to 7 percent in February, down from 12 percent in January. This number has not been at this level since December 2006-the last time only 7 percent of companies reported workers on short time or layoff.

"Responses to PMA's February 2012 Business Conditions Report are similar to those of one year ago, in February 2011, when companies in the metalforming industry, on average, grew at a 14 percent annualized rate during Q-1. The rapid growth in 2011 was cut short by the March 2011 earthquake and tsunami in Japan, and the resulting disruptions of the supply chains for automobiles and electronic products, among others.  An important question for the outlook in 2012 is whether external factors, such as occurred in 2011, will again negatively impact growth in manufacturing," said PMA President William E. Gaskin.  "Important issues that may constrain growth include difficulty hiring skilled employees and potentially higher material prices, due to low inventories of flat-rolled metal.  The January 2012 Metals Service Center Institute report for inventories of flat-rolled carbon indicated that January inventories were at 2.2 months of supply, down from 2.8 months in December.  As the PMA data indicates, expectations for growth are strong at this point, but always subject to external forces."

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