Tag: Buereau of Economic Analysis

Bullish On Precision Machining-5 Reasons

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There is a lot of uncertainty in the press about the economy and a lot of fear among businessmen regarding the near term for their business. Here are 5 reasons why I am bullish on  the Precision Machining Industry’s prospects for the balance of 2012.

5 Reasons!
  1. Institute for Supply Management (ISM) Purchasing Manager Index (PMI) for April rose to 54.8 an increase of 1.4 points. If sustained this would indicate an approximate 4.1% real growth in GDP. Precision machined components are vital components in all facets of industry and so would reflect that GDP growth.
  2. The World Steel Association (Worldsteel) just released its April 2012 Short Range Outlook (SRO) for 2012 and 2013. Worldsteel forecasts that global apparent steel use will increase by 3.6% to 1,422 Mt in 2012, following growth of 5.6% in 2011. In 2013, it is forecast that world steel demand will grow further by 4.5% to around 1,486 Mt.
  3. “According to USMTO, February machine tool sales were 2,063 units. This was 23.5% more than February 2011, which was the highest one-month rate of change since September 2011. On an annual basis, unit sales continued to see slower growth, but that rate of growth (33.5%) is still historically high… While the rate of growth in machine tool sales is bound to slow, the leading indicators are strong enough that it looks like machine tool sales should be good throughout 2012.”- Steve Kline Jr, Latest email
  4. “Future business expectations remain strong. The index showed metalworking facilities are slightly more optimistic about their business than they were last month. This continues the trend of improving business expectations that began in October 2011. Finally, since September 2011, the average spending on metalworking equipment for the next 12 months has improved. This indicates that machine tool sales should remain strong for at least the next quarter or two.” Modern Machine Shop MBI
  5.  Real personal consumption expenditures increased 2.9 percent in the first quarter, compared with an increase of 2.1 percent in the fourth.  Durable goods increased 15.3 percent, slowing from the fourth quarter’s 16.1% increase. – BEA

Anecdotally PMPA’s Business Trends Reporting sentiment indicators are strongly positive. We’ll have the index, and our prediction for the end of year average in about two weeks.