PMA Business report sees a summer slump coming

Association blames global instability, lack of U.S. government action

Source: Precision Manufacturing Association

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According to the June 2012 Precision Metalforming Association Business Conditions Report, metalforming companies expect a significant decline in business conditions during the next three months.  Conducted monthly, the report is an economic indicator for manufacturing, sampling 114 metalforming companies in the United States and Canada.

The June report shows that only 11% of participants anticipate economic activity will improve during the next three months (down from 24% in May), 57% predict that activity will remain unchanged (compared to 60% last month) and 32% report that activity will decline (up substantially from 16% in May).

PMA officials said that while business generally has been better than in 2011, concerns over domestic and global issues are creating concern. “PMA member companies have generally experienced growth in 2012 vs. 2011, with average orders for the period of January to April up 9% year-over-year and shipments up 11% over the same period,” said William E. Gaskin, PMA president. “However, the outlook expressed in the June 2012 Business Conditions Survey reflects the soft business conditions created by economic uncertainty related to the European monetary crisis, confusion in the United States about health care and tax policy (including the massive tax increases threatened at year-end), and the lack of leadership by the President and Congress in addressing our own looming debt crisis.

 “While politicians increasingly speak about the importance of a strong manufacturing economy, little concrete action has been taken to adopt pro-manufacturing policies or to reduce the cost of regulations,” he added. “Manufacturing continues to lead the modest growth in the U.S. economy, including consistent growth in jobs; however the recovery is definitely in jeopardy as reflected by PMA’s June report.  It is time for the President and Congress to set aside political interests and take concrete actions to support job growth, economic recovery and fiscal prudence.”

Metalforming companies also forecast a downward trend in incoming orders during the next three months, with only 15% anticipating an increase in orders (compared to 34% in May), 52% expecting no change (up from 46% in May) and 33% predicting a decrease in orders (up from 20%  last month).

Average daily shipping levels declined in June.  Thirty-one% of participants report that shipping levels are above levels of three months ago (down from 37% in May), 39% report that shipping levels are the same as three months ago (compared to 44% last month), and 30% report a decrease in shipping levels (up from 19% in May).

The percentage of metalforming companies with a portion of their workforce on short time or layoff increased to 14% in June, up from 10% in May.  The June figure is the same as it was one year ago.

The monthly Business Conditions Report has been conducted by PMA since 1979.