Final Cut of the Week 2022

PMPA shares important precision machining information you may have missed while  you were making essential parts. 

 2022 Outtakes & Bloopers

PMPA shares important precision machining information you may have missed while  you were making essential parts. 

December 22, 2022

Industrial Production

Industrial production declined 0.2 percent in November. At 104.5 percent of its 2017 average, total industrial production in November was 2.5 percent above its year-earlier reading.

Manufacturing output decreased 0.6 percent in November but remained 1.2 percent above its year-earlier level. The indexes for durable and nondurable goods manufacturing both declined 0.6 percent,

Capacity utilization moved down 0.2 percentage point in November to 79.7 percent, a rate that is 0.1 percentage point above its long-run (1972–2021) average.

Link: https://www.federalreserve.gov/releases/g17/Current/g17.pdf

Our take: These are not substantial changes and not at all a surprise given expected seasonal declines in the last calendar quarter.

CPI

The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.1 percent in November on a seasonally adjusted basis, after increasing 0.4 percent in October, the U.S. Bureau of Labor Statistics announced. Over the last 12 months, the all items index increased 7.1 percent before seasonal adjustment.

The Core CPI (all items less food and energy) index rose 6.0 percent over the last 12 months, but only rose 0.2 percent in November, its smallest increase since August 2021.

Energy remains the major issue. The energy index rose 13.1 percent over the past 12 months. The gasoline index increased 10.1 percent over the span and the fuel oil index rose 65.7 percent. The index for electricity rose 13.7 percent over the last 12 months, and the index for natural gas increased 15.5 percent over the same period.

Link: https://www.bls.gov/news.release/pdf/cpi.pdf

Our take: The talking heads will tell you that inflation declined in November  based on the rate of change of CPI and Core CPI. While that may be true in aggregate, it is inexcusable to make that claim while ignoring the continued double digit increases of Energy (13.1%) Gasoline (10.1%) and Fuel Oil (65.7%) over the past year.

Management Update Info/Registration

PODCAST – Choosing Work Perks

WEEKLY TIP – Five Tips to Effective Team Lead

PMPA shares important precision machining information you may have missed while  you were making essential parts. 

December 16, 2022

Trade Deficit

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $78.2 billion in October, up $4.0 billion from $74.1 billion in September, revised. October exports were $256.6 billion, $1.9 billion less than September exports. U.S.-manufactured goods exports totaled $1,081 billion through the first 10 months of 2022, up over 15% from the same period in 2021. The strong showing by Manufactured goods was insufficient in the face of higher imports at approximately 17 percent.

Link: https://www.census.gov/economic-indicators/ click on international Trade: Goods and Services, and download press release.

Manufactured Goods

New orders for manufactured goods in October, up twelve of the last thirteen months, increased $5.8 billion or 1.0 percent to $556.6 billion, the U.S. Census Bureau reported.

 Shipments, up nineteen of the last twenty months, increased $3.9 billion or 0.7 percent to $554.8 billion. This is very strong performance!

Link: https://www.census.gov/economic-indicators/ click on Manufacturers Goods and download press release.

CPI-U

Good news on the manufacturing employment front.  According to the U.S. Bureau of Labor Statistics, manufacturing employment continued its rise and was up 18,000 in May.  Retail declined by 61,000 which may indicate an opportunity to recruit former retail workers into our industry.

PODCAST – US Economy and Our Place in It

WEEKLY TIP – Seven Causes for Quench Cracking in Steel

PMPA shares important precision machining information you may have missed while  you were making essential parts. 

Dec 2, 2022

New Orders

New orders for manufactured durable goods in October, up seven of the last eight months, increased $2.8 billion or 1.0 percent to $277.4 billion, the U.S. Census Bureau announced today. This followed a 0.3 percent September increase. Excluding transportation, new orders increased 0.5 percent. Excluding defense, new orders increased 0.8 percent. Transportation equipment, up six of the last seven months, led the increase, $2.0 billion or 2.1 percent to $97.8 billion.

Link: https://www.census.gov/economic-indicators/ click on advance Durable goods

Shipments

Shipments of manufactured durable goods in October, up seventeen of the last eighteen months, increased $1.1 billion or 0.4 percent to $275.4 billion. This followed a 0.3 percent September increase. Machinery, up nineteen of the last twenty months, led the increase, $0.5 billion or 1.3 percent to $38.9 billion.

Link: https://www.census.gov/economic-indicators/ click on advance Durable goods

Women in the Manufacturing

According to the Manufacturing Institute’s latest report on closing the gender gap, the largest workforce opportunity is women.  Currently, women make up about 29% of the manufacturing workforce. The report states that adding as little as 6% of women would translate to about 750,000 more employees which would fill the available positions.  The report also notes that a lack of child care and support options are a barrier to entry, so providing a solution to this issue could be the answer to a shop’s workforce woes.

Link: Manufacturing Institute Report on Closing the Gender Gap

SPEAKING OF PRECISION PODCAST: Three Phases of Annealing

SPEAKING OF SUPPLIERS PODCAST: Datanomix

WEEKLY TIP – Decarburization 

PMPA shares important precision machining information you may have missed while  you were making essential parts. 

Nov 18, 2022

Consumer Sentiment – University of Michigan (preliminary)

Consumer sentiment fell 8.7% below October, erasing about half of the gains that had been recorded since the historic low in June.  All components of the index declined from last month, but buying conditions for durables, which had markedly improved last month, decreased most sharply in November, falling back 21% on the basis of high interest rates as well as continued high prices.

Year over year the index has declined 18.8 percent.

http://www.sca.isr.umich.edu/

New York Fed Manufacturing Survey

Business activity edged slightly higher in New York State, according to the latest November 2022 Empire State Manufacturing Survey. The headline general business conditions index climbed fourteen points to 4.5. New orders decreased slightly, while shipments expanded modestly. Delivery times were little changed, and inventories grew significantly. Labor market indicators pointed to a solid increase in employment and a longer average workweek. Input prices increased at about the same pace as last month, while selling price increases picked up. Looking ahead, firms expect business conditions to worsen over the next six months.

Employment – Job Openings

Much of our product is delivered and shipped via trucks and the trucking conditions which affects our costs and job quotes. According to FTR Transportation Intelligence’s Trucking Conditions Index, negative conditions continue. The negative conditions are mostly due to the cost of capital which increased with the recent Federal Reserve rate hikes.  The increased cost of capital was offset by the drop in diesel costs, lower freight rates and stronger freight demand and capacity utilization. FTR predicts the trucking market conditions to remain negative for quarter 1 of 2023, but only mildly.

https://freight.ftrintel.com/trucking-conditions-index

SPEAKING OF PRECISION PODCAST: Interview with Dave Seabrook

SPEAKING OF SUPPLIERS PODCAST: Datanomix

WEEKLY TIP – Basic Gaging Terminology 

PMPA shares important precision machining information you may have missed while  you were making essential parts. 

Nov 11, 2022

CPI-U Inflation Update

Consumer Price Index

The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4 percent in October on a seasonally adjusted basis, the same increase as in September, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 7.7 percent before seasonal adjustment. This was the smallest 12-month increase since the period ending January 2022.While this is welcome news, Energy prices remain problematic, with The energy index posting 17.6 percent increase for the 12 months ending October, 

link: https://www.bls.gov/news.release/cpi.htm

Manufactured Goods

New orders for manufactured goods in September increased $1.5 billion or 0.3 percent to $551.0 billion. New orders have been up eleven of the past twelve months.

New orders for manufactured durable goods in September, up six of the last seven months, increased $1.1 billion or 0.4 percent to $274.9 billion, unchanged from the previously published increase. Transportation Equipment led the increase. This was double the value of the 0.2 percent August increase.

Shipments of manufactured durable goods in September up eighteen of the last nineteen months, increased $1.1 billion or 0.2 percent to $550.3 billion. This is down measurably from the pace of shipments in August, which logged a 0.7 percent August increase.

Unfilled orders for manufactured durable goods in September, up twenty-five consecutive months, increased $5.9 billion or 0.5 percent to $1,137.8 billion.

Inventories, of manufactured nondurable goods, up following two consecutive monthly decreases, increased $0.1 billion or virtually unchanged to $313.0 billion.

Link: https://www.census.gov/economic-indicators/

Employment – Job Openings

ISM Purchasing Manager’s Index for October

The US Department of Labor’s Bureau of Labor Statistics  reported 806,000 manufacturing job openings in September. This accounts for almost 9 percent (8.63%) of total job openings reported on the last day of September.

Hires decreased in durable goods manufacturing, by 57,000 in September.

Link: https://www.bls.gov/news.release/pdf/jolts.pdf

SPEAKING OF PRECISION PODCAST: Credibility Accounting

SPEAKING OF SUPPLIERS PODCAST: Thread Rolling- CJWinter

WEEKLY TIP – Weldability of Carbon Steel 

PMPA shares important precision machining information you may have missed while  you were making essential parts. 

Nov 4, 2022

Fed Rate Hike

Federal Reserve Policy Rate  at Highest level since Great Recession in 2008

Yesterday, Federal Reserve Board Chairman Jerome Powell announced the latest 0.75 point rate hike, lifting the policy rate to a range of 3.75% – 4.00%. The vote to take this policy action was unanimous , with all 12 voting for the action.

This is the highest level for this rate since January 2008. Unexpectedly high job growth announced yesterday by ADP showed continued strength in the job market, complicating the Fed’s efforts to maintain stable prices.

Expectations were that the Fed would unambiguously signal a future  softening in rate of increases planned for the policy rate. Those expectations were dashed by the chair’s statements.

“…the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.” And “The Committee anticpates that ongoing increases in the target range will be appropriate  in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time.”}

The expectation of a pause- perhaps as soon as December- does not appear to be likely.

You can bet that it will be the main topic of conversations.

Link: https://www.federalreserve.gov/newsevents/pressreleases/monetary20221102a.htm

Link to Implementation Note: https://www.federalreserve.gov/newsevents/pressreleases/monetary20221102a1.htm

GDP

Real gross domestic product (GDP) increased at an annual rate of 2.6 percent in the third quarter of 2022, in contrast to a decrease of 0.6 percent in the second quarter. The increase in the third quarter primarily reflected increases in exports and consumer spending. Imports, which are a subtraction in the calculation of GDP, decreased.

The price index for gross domestic purchases increased 4.6 percent in the third quarter, compared with an increase of 8.5 percent in the second quarter.

Link: https://www.bea.gov/news/2022/gross-domestic-product-third-quarter-2022-advance-estimate

ISM PMI

ISM Purchasing Manager’s Index for October

October’s Manufacturing PMI came in at 50.2, its lowest level since May 2020 at the worst of the initial COVID-19 lockdown. The October value is down 0.7 percentage points below the September index, showing declining growth in orders for manufacturing. At 50.2, the ISM PMI indicator shows that the US Broad economy is still expanding.

The October Production index  according to the ISM report was up 1.7 percentage points at 52.3, compared to September’s 50.6.

https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/pmi/october/

PMPA comment: Our PMPA Business Trends report  lags ISM by a month, but our just reported September value of 171 was our fourth highest reading ever, and essentially level with August. We expect seasonal weakening in the next three months, but that weakening likely will be a ‘return to normal’ levels.

SPEAKING OF PRECISION PODCAST: Mistaking Movement for Advancement

SPEAKING OF SUPPLIERS PODCAST: Dusty Alexander with Global Shop Solutions

WEEKLY TIP – Surface Finishes 

PMPA shares important precision machining information you may have missed while  you were making essential parts. 

Oct 28, 2022

Durable Goods 

New Orders

New orders for manufactured durable goods in September, up six of the last seven months, increased $1.0 billion or 0.4 percent to $274.7 billion, the U.S. Census Bureau announced today. Transportation equipment, up five of the last six months, drove the increase, $1.9 billion or 2.1 percent to $95.4 billion.

Shipments

Shipments of manufactured durable goods in September, up sixteen of the last seventeen months, increased $0.7 billion or 0.3 percent to $274.2 billion. This followed a 1.3 percent August increase. Transportation equipment, up eleven of the last twelve months, drove the increase, $1.0 billion or 1.1 percent to $90.5 billion.

Manufacturing Production

Manufacturing Production increased 0.4 percent in September and 2.9 percent at an annual rate in the third quarter, according to the federal reserve. In September, manufacturing output rose 0.4 percent after advancing a similar amount in the previous month. At 105.2 percent of its 2017 average, total industrial production in September was 5.3 percent above its year-earlier level. Capacity utilization moved up 0.2 percentage point in September to 80.3 percent, a rate that is 0.7 percentage point above its long-run (1972–2021) average, and tied with the April 2022 rate, which was the highest since July 2000.

In the third quarter, output in the sector grew 1.4%, to a 2.9% annual rate, reversing the decline of 0.6% in the second quarter.

Despite challenges, these statistics show that Manufacturing Production remains strong, a sentiment  supported by strong sales and scheduled overtime in our PMPA Precision Machining Shops.

Chicago Fed National Activity Index

The Chicago Fed National Activity Index  released Monday, October 24 remained unchanged at +0.10.

Highlights of interest to our precision machining shops :

• Production-related indicators contributed +0.07 to the CFNAI in September, up from –0.02 in August.
• Industrial production increased 0.4 percent in September after decreasing 0.1 percent in August.
• Employment-related indicators contributed +0.06 to the CFNAI in September, up from –0.05 in August.
• The unemployment rate ticked down to 3.5 percent in September from 3.7 percent in August

These are all good news and we’ll take it.

Capital Goods

Nondefense new orders for capital goods in September increased $3.0 billion or 3.5 percent to $89.1 billion. Shipments decreased just $0.5 billion or 0.6 percent to $82.6 billion while both Unfilled Orders and Inventories increased,   up 1.0 percent for Unfilled Orders and up 0.5 percent for Inventories.

SPEAKING OF PRECISION PODCAST: Workmanship

SPEAKING OF SUPPLIERS PODCAST: Dusty Alexander with Global Shop Solutions

WEEKLY TIP – Rapid Methods for Determining the Weight of Steel 

PMPA shares important precision machining information you may have missed while  you were making essential parts. 

Oct 14, 2022

Manufacturers Goods in August

New orders for manufactured goods in August, down two consecutive months, decreased less than $0.1 billion or virtually unchanged to $548.4 billion. Shipments, up seventeen of the last eighteen months, increased $2.7 billion or 0.5 percent to $547.9 billion. Unfilled orders, up twenty-four consecutive months, increased $5.3 billion or 0.5 percent to $1,132.1 billion. Inventories, down two consecutive months, decreased $1.2 billion or 0.1 percent to $800.2 billion. New orders for manufactured durable goods in August, down two consecutive months, decreased $0.5 billion or 0.2 percent to $272.7 billion, unchanged from the previously published decrease. Transportation equipment, also down two consecutive months, drove the decrease, $1.0 billion or 1.1 percent to $92.0 billion.

Link: https://www.census.gov/economic-indicators/ click on Press Release under Manufacturer’s Goods

US Trade Deficit

August exports were $258.9 billion, $0.7 billion less than July exports. August imports were $326.3 billion, $3.7 billion less than July imports. Year-to-date, the goods and services deficit (Balance of trade) increased $132.3 billion, or 24.4 percent, from the same period in 2021. Exports increased $329.8 billion or 19.9 percent, a strong showing, but overwhelmed by  Imports which increased $462.1 billion or 21.0 percent. Link: https://www.census.gov/economic-indicators/ click on Press Release under International Trade: Goods and Services

SPEAKING OF PRECISION PODCAST: Adding Value, Creating Value

WEEKLY TIP – Maximizing Output: 3 Ratios to Maximize Production Revenue 

PMPA shares important precision machining information you may have missed while  you were making essential parts. 

Sept 30, 2022

Private Housing

The US Census Bureau reports that privately‐owned housing units authorized by building permits in August were at a seasonally adjusted annual rate of 1,517,000.  This is 10.0 percent below the revised July rate of 1,685,000 and is 14.4 percent below the August 2021 rate of 1,772,000. This is a leading indicator for our industry as  housing starts presage the purchase of light trucks and vans by contractors as well as  appliances, HVAC and other manufactured goods that equip and build out new dwellings. Link: https://www.census.gov/economic-indicators/ select New Residential Construction, Press release

Shipping

There is hope for relief from shipping challenges.  According to The Kiplinger Letter, the combination of more trucks and truck drivers plus a lower demand means that rates should decrease. Spot rates are down 30 percent from the peak in spring and only 9 percent over pre-COVID rates.  Contract rates are slowly decreasing but are still 24 percent higher than pre-pandemic rates.  The cost of ocean shipping has dropped 66% since the peak but is still almost three times the rate from pre-COVID rates. 

Reshoring

The Kiplinger Letter reported that there are signs of reshoring. One indicator is the rate at which factory jobs are coming back to the U.S. One estimate says the U.S. is on pace to increase reshored jobs by 90,000 this year which is a 35 percent hike. About 44 percent of the reshored jobs came from China. Another indicator comes from the increased construction of U.S. manufacturing facilities.

SPEAKING OF PRECISION PODCAST: Annual Meeting with Renee Merker

WEEKLY TIP – 30 Potenial Causes of Part Length Variation

PMPA shares important precision machining information you may have missed while  you were making essential parts. 

Sept 23, 2022

Fed Rate Hike

On Wednesday, Federal Reserve Chair Jerome Powell vowed to keep up the battle against inflation.  To that end, the U.S. Central Bank increased interest rates by point 75 percent. This is the third rate hike targeted to balance supply and demand.  The unfortunate effects could be a slowing economy and rising unemployment.

Producer Price Index (PPI)

The Producer Price Index for final demand fell 0.1 percent in August, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices decreased 0.4 percent in July and advanced 1.0 percent in June. (See table A.) On an unadjusted basis, the index for final demand moved up 8.7 percent for the 12 months ended in August. This wasthe second consecutive monthly decline in the index.

https://www.bls.gov/news.release/pdf/ppi.pdf?

Industrial Production

Industrial production decreased 0.2 percent in August, while  Manufacturing output edged up 0.1 percent after increasing 0.6 percent in July. At 104.5 percent of its 2017 average, total industrial production in August was 3.7 percent above its year-earlier level. Capacity utilization declined 0.2 percentage point in August to 80.0 percent, a rate that is 0.4 percentage point above its long-run (1972–2021) average.

https://www.federalreserve.gov/releases/g17/Current/g17.pdf

New York Fed Manufacturing Survey

Manufacturing activity held steady in New York State on the heels of a sharp decline last month, according to the September survey. The general business conditions index climbed thirty points to -1.5. Thirty percent of respondents reported that conditions had improved over the month, and thirty-two percent reported that conditions had worsened. The new orders index climbed thirty-three points to 3.7, indicating a slight increase in orders, while the shipments index surged forty-four points to 19.6, pointing to a rebound in shipments after they declined significantly last month.

https://www.newyorkfed.org/medialibrary/media/survey/empire/empire2022/esms_2022_09.pdf

SPEAKING OF PRECISION PODCAST: Strategy & Teamwork

WEEKLY TIP – Overall Equipment Efficiency

PMPA shares important precision machining information you may have missed while  you were making essential parts. 

Sept 9, 2022

ISM

Manufacturing continued to grow in August, with the ISM Manufacturing Purchasing Managers’ Index remaining unchanged at 52.8, according to Timothy R. Fiore, Chair of the Institute for Supply Management^® (ISM^®) Manufacturing Business Survey Committee. This is the lowest level for the Index since June 2020 at the beginning of the pandemic. Despite current conditions- work force  shortages, supply chain difficulties, escalating prices for raw materials and energy, manufacturers are continuing to make the things that matter.

 Link: https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/pmi/august

Manufactured Goods

New orders for manufactured goods in July decreased $5.7 billion or 1.0 percent to $548.5 billion.it was the first decline in nine consecutive months of increases.

New orders for manufactured durable goods in July, down following four consecutive monthly increases, decreased $0.4 billion or 0.1 percent to $273.2 billion.

Shipments, down following sixteen consecutive monthly increases, decreased $4.7 billion or 0.9 percent to $545.5 billion.

Inventories, up twenty-three of the last twenty-four months, increased $0.5 billion or 0.1 percent to $802.0 billion.

Link: go to : https://www.census.gov/economic-indicators/ and  click on Manufacturers’ Goods, Press Release

IMTS

Everyone is gearing up for the big IMTS show in Chicago next week. PMPA’s Miles Free will be giving tours to PMPA members on Wednesday afternoon and Thursday morning. Signups are on PMPA.org.  Bring your walking shoes!

SPEAKING OF PRECISION PODCAST: Approach to Productivity Improvement

WEEKLY TIP – Engine for Improvement

PMPA shares important precision machining information you may have missed while  you were making essential parts. 

Sept 2, 2022

JOLTS

According to the Job Openings and Labor Turnover Survey, job openings were unexpectedly high, but not in manufacturing.  Job openings increased in transportation, warehousing, utilities, arts, entertainment, recreation, the federal government, and state and local government education.  The job openings actually decreased in durable goods manufacturing, however, there are those who still need to fill positions and PMPA is here to help.  We have recruitment posters, notebooks for students and brochures for parents which promote precision machining as a career.  PMPA members may go to PMPA.org under For Members and order the supplies they need.

Recruitment Poster, Notebook and Brochure

Committed to Reducing Inflation

Pain of slowing growth ahead

On Friday, August 26, 2022,  Federal Reserve Chair Jerome Powell  strongly  reinforced the  Federal Open Market Committee’s commitment to bringing “core inflation”  back to its 2% target.

“We are moving our policy stance purposefully to a level that will be sufficiently restrictive to return inflation to 2 percent.”

To do that, the Fed will take actions that will reduce growth in the broad economy.

What will the pain look like?

“Reducing inflation is likely to require a sustained period of below-trend growth. Moreover, there will very likely be some softening of labor market conditions. While higher interest rates, slower growth and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses. These are the unfortunate costs of reducing inflation.”

 Link: https://www.federalreserve.gov/newsevents/speech/powell20220826a.htm

Personal Consumption Expenditures

Whatever answer you want, this will give you.

If you want to believe that inflation declined in July, use the PCE deflator, which edged down just 0.1%. Year to date, the PCE deflator has risen 6.3%.

If you want to believe that inflation increased in July, then use the Core PCE deflator which , excluding food and energy prices, rose 0.1% in July. Excluding food and energy, the PCE price index increased 4.6 percent from one year ago.

Looking for the details  by product and function? Here’s the link to Table 2.3.6U Real Personal Consumption Expenditures by Major Type of Product and by Major function:

https://apps.bea.gov/iTable/iTable.cfm?reqid=19&step=3&isuri=1&nipa_table_list=2015&categories=underlyinghttps://apps.bea.gov/iTable/iTable.cfm?reqid=19&step=3&isuri=1&nipa_table_list=2015&categories=underlying

US Trade Deficit

Continued good news

The international trade deficit was $89.1 billion in July, down $9.5 billion from $98.6 billion in June. Exports of goods for July were $181.0 billion, $0.4 billion less than June exports. Imports of goods for July were $270.0 billion, $9.9 billion less than June imports. This is the fourth straight month of decline. Exports were down slightly from their record level in June.

Link: Go to https://www.census.gov/economic-indicators/ and select Advance International Trade: Goods and click on Press Release

SPEAKING OF PRECISION PODCAST: Long Game in Washington DC

WEEKLY TIP – Grinding Advice You Probably Didn’t Know

PMPA shares important precision machining information you may have missed while  you were making essential parts. 

Aug 26, 2022

Durable Goods: New Orders, Shipments & Inventories

New orders for manufactured durable goods in July decreased less than $0.1 billion or virtually unchanged to $273.5 billion. This decrease, down following four consecutive monthly increases, followed a 2.2 percent June increase. On a year-over-year basis, new durable goods orders have increased 10.9% since June 2021.

Shipments of manufactured durable goods in July, up fourteen of the last fifteen months, increased $1.0 billion or 0.4 percent to $270.5 billion. This followed a 0.3 percent June increase. On a year-over-year basis, durable goods shipments have increased 14.8% since July 2021

Inventories of manufactured durable goods in July, up eighteen consecutive months, increased $1.1 billion or 0.2 percent to $486.2 billion. This followed a 0.4 percent June increase.

Capacity & Utilization

The latest report from the Federal Reserve on Industrial Capacity and Utilization shows manufacturing capacity utilization increased from 79.3% in June to 79.8% in July, just 0.3 below the April 2022 reading (80.1%), which was the highest since August 2000. Manufacturing output rose 0.7 percent in July and was 3.2 percent above its year-earlier level.

https://www.federalreserve.gov/releases/g17/Current/g17.pdf

Chicago Fed

The Chicago Fed National Activity Index (CFNAI) Points to a Pickup in Economic Growth in July, up +0.27 in July, up from –0.25 in June, led by improvements in production-related indicators., All four broad categories of indicators used to construct the index made positive contributions in July, and all four categories improved from June. The index’s three-month moving average, CFNAI-MA3, was unchanged at –0.09 in July.

https://www.chicagofed.org/research/data/cfnai/current-data#:~:text=The%20Chicago%20Fed%20National%20Activity,end%20of%20each%20calendar%20month

SPEAKING OF PRECISION PODCAST: Understanding Steel Specs

SPEAKING OF SUPPLIERS PODCAST – GWS Tool (Formerly Peterson Tool)

WEEKLY TIP – 6 Reasons Steel is Vacuum Treated

PMPA shares important precision machining information you may have missed while  you were making essential parts. 

Aug 19, 2022

PPI

The Producer Price Index for final demand fell 0.5 percent in July, seasonally adjusted, the U.S. Bureau of Labor Statistics reported. This decline followed advances of 1.0 percent in June and 0.8 percent in May. On an unadjusted basis, final demand prices moved up 9.8 percent for the 12 months ended in July. In July, the decrease in the index for final demand is attributable to a 1.8-percent decline in prices for final demand goods.

Eighty percent of the July decline in the index for final demand goods is attributable to gasoline prices, which fell 16.7 percent. The indexes for diesel fuel, gas fuels, oilseeds, iron and steel scrap, and grains also moved lower. But remain at very elevated levels.  Energy costs are the pressure point in all modern economies.

Link: https://www.bls.gov/news.release/pdf/ppi.pdf

CPI

Despite the much ballyhooed gaff by the White House- the Consumer Price Index has risen 8.5 percent over the past 12 months, before seasonal adjustments,  softening from its June 9.1 percent increase , the fastest since November 1981. Core inflation continues to rise at a very strong pace:  5.9 percent for the year ending in July.  Consumers  are most impacted by costs of food and energy. The food index increased 10.9 percent over the last year, the largest 12-month increase since the period ending May 1979. The energy index increased 32.9 percent for the 12 months ending July, a smaller increase than the 41.6-percent increase for the period ending June.

Link: https://www.bls.gov/news.release/pdf/cpi.pdf

Empire State Fed

Business activity declined sharply in New York State, according to firms responding to the August 2022 Empire State Manufacturing Survey. The headline general business conditions index plummeted forty-two points to -31.3. New orders and shipments plunged, and unfilled orders declined. Delivery times held steady for the first time in nearly two years, and inventories edged higher. Labor market indicators pointed to a small increase in employment, but a decline in the average workweek.  Link: https://www.newyorkfed.org/survey/empire/empiresurvey_overview

Industrial Production

In July, total industrial production increased 0.6 percent. Manufacturing output gained 0.7 percent after having fallen 0.4 percent in each of the two previous months. The production of motor vehicles and parts rose 6.6 percent, while factory output elsewhere moved up 0.3 percent. At 104.8 percent of its 2017 average, total industrial production in July was 3.9 percent above its year-earlier level. Capacity utilization moved up 0.4 percentage point in July to 80.3 percent, a rate that is 0.7 percentage point above its long-run (1972–2021) average. Link: https://www.federalreserve.gov/releases/g17/current/

Strong showing!

PODCAST – Golden Nuggets from Miles’ Blog

WEEKLY TIP – Quick Guide to Elements in Steel

PMPA shares important precision machining information you may have missed while  you were making essential parts. 

Aug 12, 2022

CPI

The Consumer Price Index for All Urban Consumers (CPI-U) remains high and unchanged in July on a seasonally

adjusted basis after rising 1.3 percent in June, the U.S. Bureau of Labor Statistics reported today.

Over the last 12 months, the all items index increased 8.5 percent before seasonal adjustment, down 0.6 percent from the 9.1-percent increase for the period ending June.

The food index increased 10.9 percent over the last year, the largest 12-month increase since the period ending May 1979.

The energy index increased 32.9 percent for the 12 months ending July, a smaller increase than the 41.6-percent increase for the period ending June.

It is difficult to think that an increase of 32.9 percent is being welcomed as relief for Energy costs- Energy cost reduction in operations should be our number one focus at these levels of prices.

Link: https://www.bls.gov/news.release/cpi.nr0.htm

Link: APPI Energy Webinar: What’s Happening in the Energy Markets

U.S. Trade Deficit

The nation’s international trade deficit in goods and services decreased to $79.6 billion in June from $84.9 billion in May (revised), as exports increased and imports decreased. Precision machined parts make up essential components for many of our country’s exports including aircraft and agricultural equipment. A $2.7 billion decrease was recorded in imports of automotive vehicles, parts and engines. $1.3 billion was passenger cars, while another $0.7 billion  was “other “automotive parts and accessories. Link: https://www.census.gov/foreign-trade/Press-Release/current_press_release/ft900.pdf

Reshoring

According to Kearney’s Reshoring Index, there are strong indications that the pandemic, supply chain issues and tariffs are changing the thinking of American companies who have off-shored manufacturing. The sentiment towards reshoring is positive among the surveyed American CEO’s and executives – 92% have positive sentiment despite a dropping index. Additionally, 79% of companies in China have either reshored or plan to in the next three years.

Link: https://www.kearney.com/operations-performance-transformation/us-reshoring-index

PODCAST – Take Your Economist to IMTS This Year

WEEKLY TIP – Thread Milling

PMPA shares important precision machining information you may have missed while  you were making essential parts. 

Aug 5, 2022

ISM PMI

The July Manufacturing PMI is down point 2 percentage point in June which is the lowest in two years. Although the overall manufacturing sector is expanding, it is doing so at a lower rate. Respondents to ISM PMI’s Business Survey reported low layoffs, strong hiring and high rates of quits. Sentiment about demand is optimistic.

Link: https://www.bea.gov/news/2022/gross-domestic-product-second-quarter-2022-advance-estimate

Economic Situation

Here are a few thoughts to help you make sense of the current economic situation

Recession: It doesn’t really matter if we call it a recession or not. The technical requirements (two consecutive quarters of negative growth) have been met. Clearly, the economy is not growing regardless of what it’s called. GDP link: https://www.bea.gov/news/2022/gross-domestic-product-second-quarter-2022-advance-estimate

Inflation: at 9.1 percent for CPI, and 11.3 percent for PPI, this is the highest level of inflation in over 40 years. Probably Biggest impact on our shops. CPI link: https://www.bls.gov/news.release/cpi.nr0.htm PPI Link: https://www.bls.gov/ppi/#:~:text=The%20Producer%20Price%20Index%20(PPI,domestic%20producers%20for%20their%20output.

Employment: A bit of a contrarian view. Talking heads cite low unemployment, but fewer people are employed to day (151,980,000) than in 2020 (152,504,000)  pre-pandemic. The U-6 Unemployment rate currently stands at 10.1 percent. Non-Farm Payrolls Link: https://fred.stlouisfed.org/series/PAYEMS

Real Wages: Real average hourly earnings decreased 3.6 percent, seasonally adjusted, from June 2021 to June 2022. The change in real average hourly earnings combined with a decrease of 0.9 percent in the average workweek resulted in a 4.4-percent decrease in real average weekly earnings over this period. Real Wages  link: https://www.bls.gov/news.release/realer.htm#:~:text=Real%20average%20hourly%20earnings%20decreased,weekly%20earnings%20over%20this%20period.

Consumer Sentiment: University of Michigan Consumer sentiment index reached an all time low in June- all components of the index fell, steepest declines  (down 24% from May) in the year ahead outlook. U of M Consumer Sentiment link: https://news.umich.edu/inflationary-concerns-outweigh-expected-income-growth/

Our take: Officialdom may not want to admit we are in a recession, but the facts are clear that growth is slowing, the employment situation is worse than prior to Pandemic, and buying power and consumer sentiment are down significantly. Anything that you can do to preserve buying power, reduce consumption, and increase productivity will pay immediate dividends as we work our way through this current economic situation.

Business Trends

Our June Business Trends was released on Wednesday and delivered valuable information including the sales index and sentiment indicators regarding our precision machining industry.  Monthly Business Trends reports are available to PMPA members on PMPA.org.  If members would like to contribute data to make the report even stronger, please contact Veronica Durden at gro.apmp@nedrudv. 

Link: Business Trends 2022

PODCAST – Interview with Johnny Freeze

WEEKLY TIP – Upset Testing

PMPA shares important precision machining information you may have missed while  you were making essential parts. 

July 29, 2022

Recession Watch

The second Consecutive quarter of negative growth was logged by the Bureau of Economic Analysis on Thursday. They reported the first or Advance Estimate coming in at a negative 0.9 percent for the second quarter of 2022. This is somewhat less than the 1.6 percent decrease recorded in the first quarter. This meets the ‘technical criteria’ for a Recession to be declared. It is likely that the NBER, who officially declares such things, will wait until August 25, when the next (second) estimate is reported.

Unreported fact that you need to know from this announcement: “The price index for gross domestic purchases increased 8.2 percent in the second quarter, compared with an increase of 8.0 percent in the first quarter (table 4).”

PMPA Inference: Inflation is still running hot- well above (over three times!)  the FED’s Target of 2 percent over the long run.

Link: https://www.bea.gov/news/2022/gross-domestic-product-second-quarter-2022-advance-estimate

Federal Reserve Rate Hike

The Board of Governors of the Federal Reserve System voted unanimously to approve a 75 basis point (three quarters of a percent ) increase in the primary credit rate to 2.5 percent, effective July 28, 2022.  In addition, ”the Committee decided to raise the target range for the federal funds rate to 2-1/4 to 2-1/2 percent and anticipates that ongoing increases in the target range will be appropriate… In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities… The Committee is strongly committed to returning inflation to its 2 percent objective.”

Press release: https://www.federalreserve.gov/newsevents/pressreleases/monetary20220727a.htm

Implementation Note: https://www.federalreserve.gov/newsevents/pressreleases/monetary20220727a.htm

PMPA Inference: Higher interest rates make capital purchases for consumers (Homes and Automobiles) more expensive, increasing support for recession, while continued strength in Jobs and wages will continue to support inflation.

Durable Goods Report for June

New Orders

New orders for manufactured durable goods in June increased $5.0 billion or 1.9 percent to $272.6 billion, the U.S. Census Bureau announced today. This increase, up eight of the last nine months, followed a 0.8 percent May increase. Transportation equipment, up three consecutive months, led the increase, $4.5 billion or 5.1 percent to $92.7 billion. Year over year change- up 11.1 percent!

Shipments  

Shipments of manufactured durable goods in June, up thirteen of the last fourteen months, increased $0.7 billion or 0.3 percent to $269.6 billion. This followed a 1.5 percent May increase. Computers and electronic products, up seven of the last eight months, led the increase, $0.4 billion or 1.4 percent to $29.0 billion. Shipments were up 11.7 percent year  over year

Three of the four revisions of the prior May data were up – New Orders, Shipments, and Total inventories. Still positive outlook for precision machining industry which produces the essential components that provide functionality to durable goods.

Link: https://www.census.gov/manufacturing/m3/adv/pdf/durgd.pdf

Chicago FED National Activity Index

The Chicago Fed National Activity Index was unchanged at -0.19 in June of 2022 from a downwardly revised -0.19 in May.  According to the release “Index points to steady economic growth in June… Industrial production decreased 0.2 percent in June after being unchanged in May.

Link: https://www.chicagofed.org/research/data/cfnai/current-data click on Current CFNAI Release link.

Dallas FED Manufacturing Outlook Survey

Mixed message as Growth in Texas factory activity decelerated sharply in June, with the production index, falling from 18.8 to 2.3, reaching its lowest reading since May 2020. However labor market measures continued to indicate robust employment growth and longer workweeks. The employment index moved down six points to 15.2 but remained well above its series average of 7.7. Twenty-four percent of firms noted net hiring, while 9 percent noted net layoffs. The hours worked index pushed up further, from 7.4 to 11.8.

Link: https://www.dallasfed.org/research/surveys/tmos/2022/2206.aspx

PODCAST – Miles’ Testimony to USITC on Section 232 Tariffs

WEEKLY TIP – Accident List

PMPA shares important precision machining information you may have missed while  you were making essential parts. 

July 22, 2022

Producer Price Index (PPI)

The Producer Price Index for final demand increased 1.1 percent in June, seasonally adjusted, according to the U.S. Bureau of Labor Statistics. On an unadjusted basis, final demand prices moved up 11.3 percent for the 12 months ended in June, the largest increase since a record 11.6-percent jump in March 2022.

Three-fourths of the June advance in the index for final demand was due to a 2.4-percent rise in prices for final demand goods. It was the sixth consecutive rise for final demand goods. Over half of the June increase in the index for final demand goods is attributable to gasoline prices, which jumped 18.5 percent.

https://www.bls.gov/news.release/pdf/ppi.pdf

JOLTS May Report

Little change in latest report.

Job openings rates decreased in 11 states and the District of Columbia, increased in 3 states, and were little changed in 36 states on the last business day of May, the U.S. Bureau of Labor Statistics reported Wednesday. Hires rates decreased in 3 states, increased in 3 states, and were little changed in 44 states and the District of Columbia. Total separations rates decreased in 7 states, increased in 3 states, and were little

changed in 40 states and the District of Columbia. Nationally, the job openings rate decreased in May while hires and total separations rates were unchanged.

Total US Changes in Job Openings declined by 427,000 from April 2022 in May 2022, down 0.3Percent. from 7.2 percent to 6.9 percent.

Total US Total Separations  relatively unchanged  at 18,000; 3.9percent for both April and May.

Nationally, the number of quits was little changed over the month.

Nationally, the number of layoffs and discharges was little changed over the month.

Industrial Production

According to the Federal Reserve’s Industrial Production and Capacity Utilization report for June, Manufacturing output declined 0.5 percent for a second consecutive month in June; even so, it rose at an annual rate of 4.2 percent in the second quarter. Capacity utilization (total Industry) decreased 0.3 percentage point in June to 80.0 percent, a rate that is 0.4 percentage point above its long-run (1972–2021) average. For Manufacturing, the Capacity Utilization Rate fell 79.3 from 79.8, but remains up 1.1 from its long run 1972-2021 average.

https://www.federalreserve.gov/releases/g17/Current/g17.pdf

PODCAST – Federal Government Spring Regulatory Agenda 2022 pt 2

WEEKLY TIP – Relative Machinability of Materials

PMPA shares important precision machining information you may have missed while  you were making essential parts. 

July 15, 2022

CPI – OH MY!

The Bureau of Labor Statistics released the Consumer Price Index for All Urban Consumers (CPI-U) for the month of June on Wednesday. The CPI-U increased 1.3 percent in June on a seasonally adjusted basis after rising 1.0 percent in May. This was higher than consensus expectations. The all items index increased 9.1 percent for the 12 months ending June, the largest 12-month

increase since the period ending November 1981.

(1981!)

Core Inflation (all items less food and energy) index rose 5.9 percent over the last 12 months. The energy index rose 41.6 percent over the last year, the largest 12-month increase since the period ending April 1980. The food index increased 10.4 percent for the 12-months ending June, the largest 12-month increase since the period ending February 1981.

Inflation continues to surprise to the upside, committing the Federal Reserve to more aggressive interest rate hikes in the coming months.

Link:

https://www.bls.gov/news.release/cpi.nr0.htm

Personal Look

Here are some almost unbelievable facts from the latest CPI release  to help you calibrate the effect of inflation on your own personal economy:

• Food at home index rose 12.2 percent over the last 12 months, the largest 12-month increase since the period ending April 1979.
• All six major grocery store food group indexes increased over the span, with five of the six rising more than 10 percent.
• The index for butter and margarine increasing 26.3 percent.
• The energy index rose 41.6 percent over the past 12 months.
• The gasoline index increased 59.9 percent over the span, the largest 12-month increase in that index since March 1980.
• The index for electricity rose 13.7 percent, the largest 12-month increase since the period ending April 2006.
• The index for natural gas increased 38.4 percent over the last 12 months, the largest such increase since the period ending October 2005.

Now is the time for all of us to look at ways to reduce, and conserve our energy usage.

Manufacturing Cost of Operations

According to Industry Week, the Manufacturing Institute and KPMG produced a report ranking the cost of manufacturing operations around the globe.  Canada was deemed number one for the most cost-effective place in the world to do business The U.S. came in 5^th and China 11^th. With scoring starting at 1 which is the lowest and ranging to five the highest, the U.S. scored the following.  Hourly Worker Compensation 5.0, quality of labor 1.67, real estate 3.0, ease of doing business 2.0, infrastructure 2.22, utilities 3.0, risk and protections 2.0 and corporate tax rates 3.0. To see how the US compares to other countries, go to:

LINK TO ARTICLE

PODCAST – Federal Government Spring Regulatory Agenda 2022 pt 1

WEEKLY TIP – Top OSHA Citations FY 2021

PMPA shares important precision machining information you may have missed while  you were making essential parts. 

July 8, 2022

Orders for Transportation Equipment

New Orders

New orders for manufactured durable goods in May increased $1.9 billion or 0.7 percent to $267.2 billion, the U.S. Census Bureau announced today. This increase, up seven of the last eight months, followed a 0.4 percent April increase. Excluding transportation, new orders increased 0.7 percent. Excluding defense, new orders increased 0.6 percent. Transportation equipment, up two consecutive months, led the increase, $0.7 billion or 0.8 percent to $87.6 billion.

Shipments

Shipments of manufactured durable goods in May, up twelve of the last thirteen months, increased $3.6 billion or 1.3 percent to $268.4 billion. This followed a 0.3 percent April increase. Transportation equipment, up seven of the last eight months, led the increase, $1.7 billion or 2.1 percent to $84.7 billion.

Other indicators

Unfilled orders for manufactured durable goods in May, up twenty-one consecutive months, increased $3.7 billion or 0.3 percent to $1,109.8 billion. Transportation equipment, up fifteen of the last sixteen months, led the increase, $2.9 billion or 0.5 percent to $639.8 billion. Inventories of manufactured durable goods in May, up sixteen consecutive months, increased $2.7 billion or 0.6 percent to $482.7 billion. Capital Goods Nondefense new orders for capital goods in May increased $0.4 billion or 0.5 percent to $83.7 billion. Shipments increased $1.3 billion or 1.6 percent to $79.8 billion.

Bottom Line- Manufacturing supporting Durable Goods Products continues to grow.

https://www.census.gov/manufacturing/m3/adv/pdf/durgd.pdf

Layoffs & Discharges

Everyone is talking about a possible recession, but according to the latest Job Openings and Labor Turnover Survey – also known as JOLTS – layoffs and discharges are at a record low.  We looked at the data going back to December 2020 and April 2022 has the lowest number of non-farm layoffs and discharges at 1.2 million.  For comparison, the number at the onset of COVID-19 was 9.1 million.

Annual Meeting 2022

Registration is open for our Annual Meeting 2022 which will be held at beautiful Loews Ventana Canyon Resort in Tucson, Arizona October 6-10th.  The Annual Meeting is PMPA’s premier networking event where owners and top managers of PMPA’s precision machining companies to meet, renew and re-connect, share knowledge and gain new insights during three days of business sessions and social events. It is also the time to celebrate and recognize deserving members at the Annual Awards Banquet. Registration is available to PMPA members on PMPA.org.

Info & Registration

PODCAST – Are you in the Feed or Speed Tribe?

WEEKLY TIP – Six Reasons Steel is Vacuum Treated

PMPA shares important precision machining information you may have missed while  you were making essential parts. 

June 24, 2022

Inflation

Inflation is likely to be with us longer than the official  statements indicate.

We analyzed the “central tendency” of the Federal Open Market Committee (FOMC)  participants in their Summary of Economic Projections document. Link https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20220615.pdf

Looks like the median Federal Open Market Committee (FOMC) member is  now expecting inflation to be 5.2 percent in 2022, up from 4.3 percent projected back in March. A far cry from that “2 percent” target.  This is consistent- the median FOMC member’s projection of inflation has increased every quarter since June 2020.

Manufacturing Outlook

PMPA’s Business Trends Report  and staff conversations with member companies continues to project  a positive year for our shops, but that is contrary to some Broader economic indicators.

According to the Federal Reserve’s Industrial Production and Capacity Utilization report  for May, 2022, released las t week, Manufacturing Production growth declined 0.1%  in May,after three months of solid gains. Capacity utilization edged up to 79.0 percent,  just 0.5 percentage point below its long-run (1972–2021) average. https://www.federalreserve.gov/releases/g17/Current/g17.pdf

The New York Federal Reserve Bank’s  Empire State Manufacturing Survey  reports “Business activity was little changed in New York State, according to firms responding to the June 2022 Empire State Manufacturing Survey. The headline general business conditions index rose ten points to -1.2. New orders and shipments edged slightly higher. https://www.newyorkfed.org/medialibrary/media/survey/empire/empire2022/esms_2022_06.pdf

While the Philadelphia Federal Reserve Bank’s Manufacturing Business Outlook Survey reported weakened manufacturing activity. “The indicators for current activity and new orders turned negative, and the shipments index also declined but remained positive. However, the firms reported continued increases in employment.” https://www.philadelphiafed.org/-/media/frbp/assets/surveys-and-data/mbos/2022/bos0622.pdf

NAM Outlook

Chad Moutray at NAM reports that  the NAM Manufacturer’s Outlook Survey “remained solid overall” though it was weakest since reading since fourth quarter of 2020.Top Business challenges: “Increased raw material costs topped the list of primary business challenges in the second quarter, cited by 90.1% of respondents. In addition, 59.3% of manufacturing leaders believed inflationary pressures would make a recession more likely in the next 12 months.”- https://www.nam.org/2022-2nd-quarter-manufacturers-outlook-survey/

PODCAST – How PMPA Helps Members With Current Material Challenges

WEEKLY TIP – Wastes that Detract from Quality

PMPA shares important precision machining information you may have missed while  you were making essential parts. 

June 17, 2022

Fed Hike

“The Federal Reserve approved the largest interest rate increase since 1994 and signaled it would continue lifting rates this year at the most rapid pace in decades as it races to slow the economy and combat inflation that is running at a 40-year high.

Officials agreed to a 0.75-percentage-point rate rise at their two-day policy meeting that concluded Wednesday, which will increase the Fed’s benchmark federal-funds rate to a range between 1.5% and 1.75%.”

This is on track to be the most aggressive rate rise cycle since the 1980’s.

Link: https://www.wsj.com/articles/fed-raises-rates-by-0-75-percentage-point-largest-increase-since-1994-11655316170

Producer Price Indexes PPI

Final Demand

The Producer Price Index for final demand increased 0.8 percent in May, seasonally adjusted, the

U.S. Bureau of Labor Statistics reported. Nearly two-thirds of the rise in the index for final demand was due to a 1.4-percent advance in prices for final demand goods. The index for final demand services increased 0.4 percent.

Final Demand Goods

The Index for Final Demand goods- its fifth consecutive monthly rise – was up 1.4 percent in May. This rise followed advances of 0.4 percent in

April and 1.6 percent in March. On an unadjusted basis, final demand prices moved up 10.8 percent for the 12 months ended in May. Over 70 percent of the increase in May can be traced to a 5.0-percent advance in prices for final demand energy.  Closer Look -Shop Viewpoint Forty percent of the May increase in prices for final demand goods can be attributed to an 8.4-percent advance in the index for gasoline. Nearly 30 percent of the May increase in the index for final demand services can be attributed to prices for truck transportation of freight, which rose 2.9 percent.

Link: https://www.bls.gov/news.release/ppi.nr0.htm

Economic News

Exports of US Manufactured Goods, the U.S. Dollar, and Inflation- Up, Up, Up

 Manufactured Goods Exports- Up 15.55%

Exports of U.S. manufactured goods were up 15.55 percent through the first four months of 2022, totaling $410.185 billion.  Fabricated Metals Exports for the first four months of the year, not seasonally adjusted were $14.349 billion, according to the Census Bureau / Bureau of Economic Analysis report CB-22-88, BEA 22-22 Monthly US International Trade in Goods and Services April 2022 report, Exhibit 1. Capital Goods Exports increased $1.2 billion, Civilian Aircraft Exports increased $1.3 Billion.

 Link : Go to https://www.census.gov/economic-indicators/ and select International Trade Goods And Services

Interesting export fact: The state of Texas led  in “origin of movement of US Exports of goods”  for both manufactured ($21 billion ) and non-manufactured commodities ($14.044 billion)  as well as reexports ($5.888 billion) commodities in April, according to the supplement published  with the international Trade Report. California was second at $15.900 billion, and Louisiana was third  at $10.714 billion. Filling out the top ten  New York ($7.358 billion), Illinois ($6.330 billion)

Florida $5.462 billion), Michigan ($5.230 billion), Washington ($5.122 billion), Ohio ($4.832 billion) and Pennsylvania ($4.376 billion)  Source Exhibit 2 of CB 22-88 Supplement

Link : Go to https://www.census.gov/economic-indicators/ and select International Trade Goods And Services

US Dollar

The US Dollar Index reached 105 on Monday, June 13,  its highest level since November 2002, driven by the latest Inflation Data (See next story)  A strong dollar makes US Goods Exports more difficult to buy in Local currency terms, while making imports less expensive on US Dollar terms.  Link: https://www.marketwatch.com/investing/index/dxy

Inflation

US Consumer Price Index Achieved a 40 Year high in May of 8.6% according to the Bureau of Labor Statistics CPI report dated Friday june 10, 2022. The Consumer Price Index for All Urban Consumers (CPI-U) increased 1.0 percent in May on a seasonally adjusted basis after rising 0.3 percent in April. The all items index increased 8.6 percent for the 12 months ending May, the largest 12-month increase since the period ending December 1981. The energy index rose 34.6 percent over the last year, the largest 12-month increase since the period ending September 2005. The food index increased 10.1 percent for the 12-months ending May, the first increase of 10 percent or more since the period ending March 1981.  You are not imagining the higher prices impact on your buying power! Link: https://www.bls.gov/news.release/pdf/cpi.pdLink

PODCAST – Considerations in Today’s Inflationary & Supply Constrained Economy

TIP OF THE WEEK – Five Ways Fine Austenitic Grain Size Affects a Machine Shop

PMPA shares important precision machining information you may have missed while  you were making essential parts. 

June 10, 2022

Money or buying power?

We read a lot of press reports, follow a number of economists, and track a lot of economic indicators. The facts are clear, CPI consumer price index and PPI producer price index show exceedingly high inflation. It is not clear “What is the true cause of the inflation?” And “is a recession is on its way?”

The US government printed a lot of money during the COVID 19 pandemic- with an extra $3 trillion of M1 sloshing around the economy right now, and many of us blame that extra money for today’s inflation. This would be “demand driving inflation.” However, real consumer spending (including both goods and services) is essentially equal to levels prior to the pandemic. This suggests that price inflation is probably due to current supply chain chaos rather than excess money supply. “Short-supply is driving inflation.”

As for Recession, we have seen indicators that one might be coming, and the Fed is all but admitting that they are behind on tightening to tame inflation. Recessions almost always follow FED tightening cycles. With the extra cash, ($3 trillion in M1 money supply) from pandemic relief in the economy, if we get a recession, consumers will still have cash to continue spending- on both goods AND services. That should keep any recession short and shallow- far different than the pandemic recession of 2020. However– if the 1980’s recovery is our model- we expect to see relatively high (4-5%) inflation for an extended period.

Bottom line for your shop- look at purchasing power, not just dollar signs and bank balances. Units produced and sold, not dollars received. Do not confuse “Money” for “Buying Power.”

Manufacturers Goods

New orders for manufactured goods in April, up eleven of the last twelve months, increased $1.8 billion or 0.3 percent to $533.2 billion, the U.S. Census Bureau reported. Shipments, up twenty-three of the last twenty-four months, increased $0.9 billion or 0.2 percent to $532.1 billion. New orders for manufactured durable goods in April, up six of the last seven months, increased $1.3 billion or 0.5 percent to $265.5 billion.

Link: Click on Manufacturers orders: https://www.census.gov/economic-indicators/

Manufacturers Job Openings

Manufacturers job openings recorded in April  were at an all time High, 996,000 openings, well above the twelve month average of 877,250 , and above pre-pandemic levels. The U3 unemployment rate remains at 3.6%, while the workforce participation rate increased slightly from 62.2 percent to 62.3 percent. https://www.bls.gov/news.release/pdf/jolts.pdf.

Regional Manufacturing Surveys- Mixed Signals Appear in Leading Indicators

Empire State  

May 2022: “After growing strongly last month, business activity declined in New York State, according to firms responding to the May 2022 Empire State Manufacturing Survey. The headline general business conditions index dropped thirty-six points to -11.6. New orders declined, and shipments fell at the fastest pace since early in the pandemic. Delivery times continued to lengthen, and inventories expanded.” Link: https://www.newyorkfed.org/medialibrary/media/survey/empire/empire2022/esms_2022_05.pdf?la=en

Dallas Fed-Mixed Movements

“Texas factory activity expanded at a fairly robust pace in May, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose from 10.8 to 18.8, signaling an acceleration in growth from April.

Other measures of manufacturing activity showed mixed movements. While the capacity utilization and shipments indexes moved up—to 19.8 and 13.1, respectively—the survey’s demand indicators retreated. The new orders index fell nine points to 3.2, and the growth rate of orders index plummeted 18 points and turned negative at -5.3. Both readings mark their lowest levels in about two years.” Link: https://www.dallasfed.org/research/surveys/tmos/2022/2205.aspx

Philadelphia Fed Mixed Indicators

“The diffusion index for current activity fell 15 points to 2.6 in May, its lowest reading in two years. Most firms (57 percent) reported no change in current activity this month, while the share of firms reporting increases (22 percent) narrowly exceeded the share reporting decreases (20 percent). The index for new orders rose 4 points to a reading of 22.1, and the current shipments index climbed 16 points to 35.3, its highest reading since October 2020. “ Link: https://www.philadelphiafed.org/surveys-and-data/regional-economic-analysis/mbos-2022-05

PODCAST – Four Tips to Employee Acceptance to Change

TIP OF THE WEEK – Finishing Surfaces

PMPA shares important precision machining information you may have missed while  you were making essential parts. 

June 3, 2022

Recession Watch

A recession is declared when the NBER recognizes a significant economic decline (negative GDP growth) for two successive quarters.

Official definition here : https://www.nber.org/business-cycle-dating-procedure-frequently-asked-questions#:~:text=A%3A%20The%20NBER’s%20traditional%20definition,more%20than%20a%20few%20months.

According to its May 26, 2022 News Release Real Gross Domestic Product (GDP) decreased at an annual rate of 1.5 percent in the first quarter of 2022, according to the “second” estimate released by the Bureau of Economic Analysis. The decrease in real GDP reflected decreases in private inventory investment, exports, federal government spending, and state and local government spending, as well as imports.  This quarter one decrease is the first necessary condition towards a future determination of “recession” by the NBER, which is, by definition, announced after the fact.

Simultanously, BEA  notes that “The price index for gross domestic purchases increased 8.0 percent (revised) in the first quarter, compared with an increase of 7.0 percent in the fourth quarter.”

Inflation is here.

https://www.bea.gov/sites/default/files/2022-05/gdp1q22_2nd.pdf

Manufacturing Activity

Manufacturing Activity grew unexpectedly according to the May Purchasing Manager’s Index published by the Institute for Supply Management.

Just as PMPA’s Monthly Business Trends Report has been at record highs- even after dropping over 13% in April- the ISM’s New Orders Index advanced to its highest level in three months, according to press reports. According to ISM’s  Chairman of the Business Survey Committee, Timothy Fiore, “The US manufacturing sector remains in a demand-driven, supply chain-constrained environment…sentiment remained strongly optimistic regarding demand, with five positive growth comments for every cautious comment.” We agree with the supply constrained opinion, as we are seeing strong inventory build up as our OEM customers pivot from “Just in time” to “Just in case” or “Just Because” inventory policies.

ISM  link: https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/

Bloomberg Pressreport on ISM: https://www.bloomberg.com/news/articles/2022-06-01/us-manufacturing-growth-unexpectedly-firms-on-stronger-orders

JOLTS (Job Openings and Labor Turnover Summary)

The Labor Department’s Monthly JOLTS (Job Openings and Labor Turnover Survey) report showed job openings remaining near record high levels as they declined slightly in April. According to the report, The number of job openings fell from March’s record of 11.9 million to 11.4 million. The JOLTS report also noted that 4.4 million workers left their jobs in April; The quits rate was 2.9%, unchanged from prior month.  Layoffs and discharges (seasonally adjusted) “edged down to a series low of 1.2 million.” A sign of the demand for workers can be seen in the  fact that in April there were 1.9 openings  per unemployed person. According to the report “The largest increases were in transportation, warehousing, and utilities (+97,000); nondurable goods manufacturing (+67,000); and durable goods manufacturing (+53,000).

https://www.bls.gov/news.release/jolts.nr0.htm

PODCAST – Interview with Erick Frack

TIP OF THE WEEK – Iron

PMPA shares important precision machining information you may have missed while  you were making essential parts. 

May 27, 2022

Industrial Production Remains Positive: Fed

In April, Total Industrial Production rose 1.1%- fourth consecutive month of gains above 0.8 percent or more. Manufacturing output rose 0.8%,  up 5.8 percent year over year. Excluding an increase of 3.9 percent  in production of motor vehicles and parts, factory output rose 0.5 percent. Capacity utilization increased by 0.6 percent to 79.2% in April, the highest reading since April 2007. This is 1.1 percent above its long-run average.  

Chicago Fed National Activity Index

The Chicago Fed National Activity Index (CFNAI) was +0.47 in April, up from +0.36 in March. . All four broad categories of indicators used to construct the index made positive contributions in April, and three categories improved from March. The index’s three-month moving average, CFNAI-MA3, ticked down to +0.48 in April from +0.49 in March.

Production-related indicators contributed +0.26 to the index in April, up slightly from +0.20 in March. Industrial production increased 1.1 percent in April after moving up 0.9 percent in March.

https://www.chicagofed.org/research/data/cfnai/current-data

OSHA

Machine shops with 100 or more employees may have updated OSHA reporting rules. According to Kiplinger, labor regulators are pushing change the 250 employee threshold to 100 or more employees for additional reporting of illness and injury data.  Additionally, OSHA would make some of the data available to the public.  PMPA and The Franklin Partnership are preparing comments to protect the privacy of our performers and to assure that any data reporting is relevant to actual safety outcomes.  PMPA invites your input and questions regarding any OSHA topics.

PODCAST – 2022 NTC & Mastery Program Overview

TIP OF THE WEEK – Market Insight: Lawn and Garden Industry

PMPA shares important precision machining information you may have missed while  you were making essential parts. 

May 13, 2022

ISM

The  April ISM  Manufacturing Purchasing Managers’ Index (PMI) logged its lowest month since July 2020. While the index shows modest continued expansion, it dropped 1.7 percentage points from its March Value. Indexes for New Orders, Production, Prices, Backlog and Employment were all down. Link: https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/pmi/april/

Manufactured Goods

New Orders for Manufactured Goods in March increased by $11.8 billion- that’s 2.2 percent- according to the US Census. New orders, as well as Shipments, have been up 22 of the last 23 months. Shipments increased at about the same pace, up 2.3 percent, or $12.6 billion.  

Durable Goods

New Orders for Durable Goods increased in March by $3.0 billion, or 1.1 percent, up five  of the last six months. Transportation equipment led the increase up $2.0 billion or 2.6 percent. Manufactured Non Durable Goods  increased $8.8 billion, or 3.2 percent, led primarily by Coal and petroleum products- $7.6 billion or 11.9 percent proving that it is demand for energy driving the current round of cost increases that we are seeing as manufacturers.- and as consumers “paying at the pump.” 

US Census link: https://www.census.gov/economic-indicators/- Click on Press Release  under “Manufacturers’ Goods.”

Gas Prices

Kiplinger reports that both unleaded gas and diesel prices are unlikely to go down soon.  The Russian-Ukraine crisis spiked prices to a national average of $4.33 per gallon in March, but regular summer travel enhanced by COVID-fatigued vacations may cause the price to beat that March high. All those transportation vehicles that use diesel are going to be more expensive to operate – diesel hit an all-time high at $5.18 this month. Natural gas is also expected to go up as demand increases.  Europe is buying excess liquified gas from the US to reduce reliability on Russian supplies. If the exports continue, natural gas prices may increase. 

PODCAST -NFL Teams, Street Gangs & Your Workforce

TIP OF THE WEEK – Seven of top 25 high paying jobs

PMPA shares important precision machining information you may have missed while  you were making essential parts. 

April 28, 2022

What is Happening with Steel Scrap

The recent bearish trend in Steel scrap came ahead of this weeks Stock Market Correction and has many members scratching their heads. If the process for steel and stainless are going up, why isn’t the price We get paid for steel scrap following suit?

Answer- Geopolitics- impacting supply and demand

Scrap oversupply in April was evident and is responsible for the lower volumes and lower prices for scrap.

But why the oversupply?

According to our sources- Turkey, who is usually the big buyer for US Scrap Steel exports  is currently taking advantage of low cost Steel semi finished products from Russia, now available at Fire sale prices. Russian Steel exports have not yet  been placed under sanction.

So the Turkish mills  save the melting and casting costs by purchasing semi- finish for further processing.

That’s why nobody want s to pay you what you think your chips are worth.

Philadelphia Fed Manufacturing Business Outlook Survey

The Philadelphia Federal Reserve Bank’s reports that “Manufacturing activity continued to expand in the region, according to the firms responding to the April Manufacturing Business Outlook Survey. The survey’s indicators for current general activity, shipments, and new orders declined from last month’s readings but remained positive. The employment index and both price indexes edged higher and remain elevated. The future indicators for general activity and new orders fell sharply, but overall the firms continued to expect growth over the next six months. Raw material costs increased  10-12.5 percent while Energy climbed 7.5-to 10 percent in April. Link: https://www.philadelphiafed.org/-/media/frbp/assets/surveys-and-data/mbos/2022/bos0422.pdf

Chicago Fed National Activity Index

The Chicago Fed National Activity Index (CFNAI) moved down to +0.44 in March from +0.54 in February. Three of the four broad categories of indicators used to construct the index made positive contributions in March, but two categories deteriorated from February. Manufacturing industrial production was the strongest contributor, it  moved up 0.9 percent in March after increasing 1.2 percent in February. Link: https://www.chicagofed.org/research/data/cfnai/current-data

PODCAST – What’s in a Name? Pride.

TIP OF THE WEEK – A Better Definition for Quality

PMPA shares important precision machining information you may have missed while  you were making essential parts. 

April 22, 2022

Total Industrial Production

Total industrial production advanced 0.9 percent in March and rose at an annual rate of 8.1 percent for the first quarter. Manufacturing output gained 0.9 percent in March; the output of motor vehicles and parts jumped 7.8 percent, while factory output elsewhere moved up 0.4 percent. In March, the jump in motor vehicle production contributed to increases of 3.9 percent and 5.2 percent for consumer durables and transit equipment, respectively.

Manufacturing Output

Manufacturing output rose 0.9 percent in March and was 4.9 percent above its year-earlier level. For the first quarter, factory output advanced at an annual rate of 5.4 percent. In March, the indexes for durable and nondurable manufacturing increased 1.3 percent and 0.4 percent, respectively

Capacity Utilization for manufacturing

Capacity utilization for manufacturing increased 0.6 percentage point in March to 78.7 percent. The factory operating rate was above its long-run average of 78.1 percent for the first time since August 2018.

Link: https://www.federalreserve.gov/releases/g17/Current/g17.pdf

EV on Rise

High gas prices have increased the demand for electric vehicles.  For precision machining shops serving the automotive industry, keep an eye on expanding EV production. According to Forbes.com, EV auto sales are expected to increase by 37 percent this year. And Industry Week reports that a Japanese EV battery firm plans to build a 2 billion dollar plant in Kentucky, Toyota is building a 1 billion dollar EV battery plant in North Carolina and new Vietnamese electric car company is building an assembly plant in North Carolina.

PODCAST – OSHA’s Latest Stats

TIP OF THE WEEK – Choosing a Heat Treater

PMPA shares important precision machining information you may have missed while  you were making essential parts. 

April 15, 2022

Inflation Alert – PPI

Inflation Alert- as if you didn’t know.

The Producer Price Index for final demand increased 1.4 percent in March, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This rise followed advances of 0.9 percent in February and 1.2 percent in January. On an unadjusted basis, final demand prices moved up 11.2 percent for the 12 months ended in March, the largest increase since 12-month data were first calculated in November 2010.

Leading the March increase in the index for final demand goods, diesel fuel prices jumped 20.4 percent. The indexes for gasoline, fresh and dry vegetables, jet fuel, iron and steel scrap, and electric power also moved higher.

Steps to take- Keep a sharp eye on the commitments that you are making when doing contract review and quoting new work.

https://www.newyorkfed.org/survey/empire/empiresurvey_overview

CONSUMER PRICE INDEX – MARCH 2022

The Consumer Price Index for All Urban Consumers (CPI-U) increased 1.2 percent

in March on a seasonally adjusted basis after rising 0.8 percent in February,

the U.S. Bureau of Labor Statistics reported today.

The all items index continued to accelerate, rising 8.5 percent for the 12months ending March, the largest 12-month increase since the period endingDecember 1981. Energy focus:The energy index rose 32.0 percent over the past 12 months with all major energycomponent indexes increasing. The index for gasoline rose 48.0 percent over the last yearand the index for natural gas rose 21.6 percent. The index for electricity rose11.1 percent for the 12 months ending March. In March the gasoline index rose 18.3 percent and accounted for over half of the all itemsmonthly increase; other energy component indexes also increased. The food indexrose 1.0 percent and the food at home index rose 1.5 percent.  Attention Managers, Sales and estimators: Are you accounting for 32% escalating energy costs in your Quotes and pricing?

https://www.bls.gov/news.release/cpi.nr0.htm

FOMC Monetary Policy Statement

Empire State Manufacturing Report issued by The New York Federal reserve Bank Wednesday  reported that “Manufacturing activity declined in New York State for the first time since mid-2020.”  

The report’s general business conditions index fell fifteen points to -11.8, its lowest level since May 2020, early in the Pandemic.

New orders and shipments declined modestly, while unfilled orders increased. Delivery times continued to lengthen substantially, and inventories expanded.

“The delivery times index climbed eleven points to 32.7, pointing to a substantial increase in delivery times, and inventories rose at the fastest pace in years.”

https://www.newyorkfed.org/medialibrary/media/survey/empire/empire2022/esms_2022_03.pdf?la=en

Why Climate Change Will Affect the Supply Chain

Link to Business Insider Article

PODCAST – Mastery Program Tour 2 Overview

TIP OF THE WEEK – Yield Loss Due to Bar End Remnants

PMPA shares important precision machining information you may have missed while  you were making essential parts. 

April 8, 2022

Manufacturing Employment

Manufacturing Employment rose by 38,000 in March 2022, adding a total of 102,000 employees in the first Quarter of 2022, according to the BLS.

Employment in durable goods industries rose by 22,000, with gains in transportation equipment (+11,000) and electrical equipment and appliances (+4,000)

Since February 2020, manufacturing employment is down by just 128,000, or 1.0 percent- could catch up by end of year if trend continues.

https://www.bls.gov/news.release/pdf/empsit.pdf

GDP Growth in USA

The Bureau of Economic Analysis reported that GDP in the Fourth Quarter of 2021  increased at an annual rate of 6.9 percent. In the third quarter, the rate was 2.3 percent. The increase in real GDP primarily reflected increases in private inventory investment, exports, PCE, and nonresidential fixed investment. According to the chart- Contributions to Percent Change in Real GDP by Industry Group,  Non- durable Goods Manufacturing contributed 0.62 percent to the percent change in GDP, while Durable Goods Manufacturing contributed 0.58 percent. Taking both into account, Manufacturing  made up 1.2 percent of the 6.9 percent GDP increase, or 17.3 percent of the change.

https://www.bea.gov/sites/default/files/2022-03/gdp4q21_3rd.pdf

Factory Orders

New orders for manufactured goods in February, down following nine consecutive monthly increases, decreased $2.7 billion or half a percent to $542.0 billion, the U.S. Census Bureau reported today. This followed a 1.5 percent January increase. Shipments, up twenty-one of the last twenty-two months, increased $3.1 billion or 0.6 percent to $541.0 billion. This followed a 1.4 percent January increase. Unfilled orders, up thirteen consecutive months, increased $5.4 billion or 0.4 percent to $1,288.5 billion. This followed a 0.9 percent January increase. Our takeaway, orders may be softening slightly, but our shops are still busy and working on Backlog.

https://www.census.gov/manufacturing/m3/prel/pdf/s-i-o.pdf
 

PODCAST – The Lie of National Security and Tariff Agreements with EU, Japan and Great Brittan

 PODCAST – Thriving with you in 2022: NTC

WEEKLY TIP – Audit Certifications

PMPA shares important precision machining information you may have missed while  you were making essential parts. 

March 25, 2022

Economic News- Manufacturing Focus from February

Every talking head in the universe is dwelling on the FOMC 25 basis point  hike. Here’s what you need to know:

Producer Price Index in February

The Producer Price Index for final demand increased 0.8 percent in February, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This rise followed advances of 1.2 percent in January and 0.4 percent in December 2021. (That is 2.4 % in just three months!) On an unadjusted basis, final demand prices moved up 10.0 percent for the 12 months ended in February. Up 10 percent in 12 months.

Final demand goods  logged their largest advance  since June 2009 with February 2022 jumping 2.4 percent.

Ignore these at your peril.

Link: https://www.bls.gov/news.release/pdf/ppi.pdf

Industrial Output and Manufacturing

Total industrial production rose 0.5 percent in February to a level that is 103.6 percent of its 2017 average. Manufacturing output increased 1.2 percent after having been little changed in each of the previous two months. The indexes for durable and nondurable manufacturing moved up 1.3 percent and 1.1 percent, respectively, Capacity utilization for manufacturing increased 0.9 percentage point in February to 78.0 percent, 2.5 percentage points higher than its pre-pandemic level but 0.1 percentage point below its long-run average.

Link: https://www.federalreserve.gov/releases/g17/Current/g17.pdf

New Residential Construction Activity

Why would we call this manufacturing focus news? If you have been paying attention at any of the ITR [presentations, we know that New Residential Construction is a leading indicator for Light vehicle  sales as tradesmen upgrade their trucks and vans.

New Residential Construction Activity rose 6.8% to 1,769,000 units at the annual rate in February, the fastest pace since June 2006.

Link: htps://www.federalreserve.gov/releases/g17/Current/g17.pdf

PODCAST – Workforce is Still Biggest Challenge

WEEKLY TIP – SWOT for Recruitment & Retention

PMPA shares important precision machining information you may have missed while  you were making essential parts. 

March 18, 2022

New York Fed Manufacturing Survey

“Business activity declined in New York State for the first time since early in the pandemic, according to firms responding to the March 2022 Empire State Manufacturing Survey. The headline general business conditions index fell fifteen points to -11.8, its lowest level since May 2020. New orders and shipments declined modestly, while unfilled orders increased. Delivery times continued to lengthen substantially, and inventories expanded.”

Link to NYFED Survey: https://www.newyorkfed.org/survey/empire/empiresurvey_overview

FOMC Monetary Policy Statement

The most important rate in the world is the cost of money.

“The federal funds rate1 is the FOMC’s main policy rate. Changes in the federal funds rate trigger changes in other short- and medium-term interest rates, the foreign exchange value of the U.S. dollar, and other asset prices that influence households’ and businesses’ spending and investment decisions.”- Chicago Fed https://www.chicagofed.org/research/dual-mandate/the-federal-funds-rate

Today, the FOMC announced “The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With appropriate firming in the stance of monetary policy, the Committee expects inflation to return to its 2 percent objective and the labor market to remain strong. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 1/4 to 1/2 percent and anticipates that ongoing increases in the target range will be appropriate. In addition, the Committee expects to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities at a coming meeting.”

Chairman Powell had already  preannounced a quarter point hike to Congress. This was no surprise, and disappointing to many who thought that the current round of inflation needs stronger medicine.

With Consumer prices  up 0.8% in February  (Food up 1% Energy up 3.5% and Gasoline up 6.6%)  there is no denying the need to take strong action against inflation.

Producer prices  up 0.8% in February- up 10.0% over last 12 months. This is the rate that affects our shops, and will ultimately drive higher the price of goods purchased by the consumers.

One can  use the average of the CPI and the PPI to indicate the current level of inflation across the entire economy. With CPI up 7.9% over the past year, and PPI up 10.0% we are experiencing inflation of 8.95% over the past year.

PPI link: https://www.bls.gov/ppi/

CPI link: https://www.bls.gov/cpi/

FOMC Statement Link: https://www.federalreserve.gov/newsevents/pressreleases/monetary20220316a.htm

FOMC Projections Link: https://www.federalreserve.gov/monetarypolicy/fomcprojtable20220316.htm

Job Openings

• Latest JOLTS report shows there were 855,000 job openings in manufacturing in January. The number of jobs available continues to exceed pre-pandemic levels. Over the past 10 months, job openings in the sector have averaged 873,000, including the record 943,000 in July.
• Total quits in the manufacturing sector rose from 322,000 in December to 331,000 in January, a new record. That is approximately 2.6% of the manufacturing workforce.
• JOLTS Link: https://www.bls.gov/news.release/pdf/jolts.pdf

PODCAST – Interview with Jeff Ohlemacher

TIP OF THE WEEK – Titles Matter

PMPA shares important precision machining information you may have missed while  you were making essential parts. 

March 4, 2022

PMPA Business Trends Report – January

January 2022 continues the positivity as our PMPA Business Trends Sales Index outperforms the FED’s Industrial Production and Manufacturing indexes. Lead times are as high this report as they were last January in 2021- you know how that turned out. There are plenty of issues in the larger world to give us pause, but the consensus of your peers, as given by their data, is one of continued positivity and performance for our precision machining shops in the quarter ahead.

New Orders

According to the Institute for Supply management, their February Purchasing Managers Index showed the US economy growing for the 21^st consecutive month, and increased one point over the January value. Their New Orders Index was up 3.8 percentage points compared to January, Clearly, your quoting department has got a lot busier these days, too. https://www.prnewswire.com/news-releases/manufacturing-pmi-at-58-6-february-2022-manufacturing-ism-report-on-business-301492024.html

Russia-Ukraine 

Will the Russian invasion on the Ukraine affect our industry?  For materials that we source from Europe, both Russia and Ukraine are important suppliers of energy, as well as ingredients for metals like stainless steel, which is already in short supply. Russia is our second largest supplier of titanium, and a top five supplier of aluminum. 60 % of Ukraine’s exports to US are crude iron and products made from iron and steel. The United States are Ukraine’s 8th largest export buyer. 

State of the Union

In the State of the Union, President Biden asked the House and Senate to pass the Bipartisan Innovations Act, also known as the America Competes Act.  According to Franklin Partnership, this act very important for precision machining and could prove the most important manufacturing policy bill since 2014. Although still in negotiations, the hope is that it will pass by Memorial Day. 

Manufactured Durable Goods

New orders for manufactured durable goods in January increased $4.3 billion or 1.6 percent to $277.5 billion, the U.S. Census Bureau announced today. Durable Goods Orders is the market indicator with the best correlation to PMPA member shipments, PMPA  research has shown.  We know you are busy,  new durable goods orders have jumped 14.1% over the past 12 months, with core capital goods orders growing 10.5% year-over-year.  

Click on press release for Advance Report Durable Goods at : https://www.census.gov/economic-indicators/

PODCAST – Yield Loss in your Shop

TIP OF THE WEEK – Steel Defects