Manufacturing Contracts in November- ISM PMI

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The Institute for Supply Management Purchasing Managers Index (PMI) for the manufacturing sector dropped to 48.6 in November from an October reading of 50.1. The reading, below 50% indicates contraction. This month’s reading was the lowest since the end of the Great Recession in June 2009.

Manufacturing contracts for first time since

The employment index was at 51.3%, up from 47.6% in October, and the new orders index was at 48.9%, down from 52.9%.

The only good news for manufacturing in the ISM release was Manufacturing Employment and Raw Material prices:

Employment Index registered 51.3 percent, 3.7 percentage points above the October reading of 47.6 percent.
The Prices Index registered 35.5 percent, a decrease of 3.5 percentage points from the October reading of 39 percent, indicating lower raw materials prices for the 13th consecutive month.

Among the manufacturing markets that contracted in November according to the ISM report:

Fabricated Metal Products
Machinery
Primary Metals
Electrical Equipment
Appliances & Components
Computer & Electronic Products

The PMPA’s Business Trends Report for October came in at 119 for October – down two points from last month’s 121, down 12 points from October 2014’s record of 131, and interestingly, exactly the same value as the average for October for the past five years – 118.8 or 119. Our report also showed expectations for employment leveling off in October.

PMPA October 2015 Business Trends Report

Graph Courtesy Calculated Risk Blog

What are USA’s Top Ten Manufactured Exports?

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We learned with painful social and economic clarity in the great recession of 2008-2009 that it is demand, and not supply, that drives our economy.

So what are the top 10 demanded U.S. manufactured exports?

Transportation Equipment
Chemicals
Machinery
Computer and Electronic Products
Petroleum and Coal Products
Food
Primary Metal
Medical Equipment, Sporting Goods, and Miscellaneous
Fabricated Metal Products
Electrical Equipment

(source: Brookings EXPORT NATION 2012)

Here is what the report had to say about Manufacturing:

“Manufacturing comprised the majority of U.S. exports in 2010. While on a declining trend as a share of U.S. exports, manufacturing has seen a comeback in the first year of recovery. About 61 percent of U.S. exports, manufacturing industries produced three-quarters of the additional U.S. sales abroad between 2009 and 2010. The sector’s sales abroad increased by 14.5 percent and expanded faster than U.S. exports overall. Machinery, transportation equipment, and chemicals delivered one-half of manufacturing exports growth.”

“Manufacturing contributed disproportionately to export recovery in the large metros (metropolitan areas). While manufacturing accounted for 59 percent of the exports sold by industries located in the large metros in 2010, it delivered almost 76 percent of the exports growth in these metros. Midwestern metros illustrated this trend, with 85 percent of their exports growth generated by manufacturing industries.”

“Manufacturing industries delivered the majority of export sales growth in 94 out of the largest 100 metros in 2010.”

Here are the facts on US Manufactured Goods Exports. Where do you fit in?

Precision machining companies produce components that are key to functionality of transportation equipment, machinery, computers and electronic products, medical equipment, and electrical equipment.

Our parts are used to harvest, process, and package food, and to produce and refine petroleum and coal products.

We are a sub-industry of Fabricated Metals- number 9 on the list.

What are USA’s Top 10 Manufactured Exports?

They are all items that would not be exportable if it were not for the role of our precision machined products.

Why does manufacturing – especially precision machined manufacturing- matter?

Ask an economist.

Or look at exports.

Recession photo

Manufacturing Jobs – What You Need (And Want) To Know

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Four of the top five manufacturing sectors by added employment in 2012 were key markets served by precision machining; Transportation Equipment, Motor Vehicles and Parts, Fabricated Metal Products, Machinery.

(The fifth market was Food Manufacturing, and yes, some of our companies make parts for food service too- think blender parts, nozzles and components for food dispensing, preparation and packaging equipment.)

Graph courtesy Chad Moutray, National Association of Manufacturers, NAM.

According to the Bureau of Labor Statistics, the number of Jobs in Manufacturing increased by 180,000 in 2012.

“In December, manufacturing employment rose by 25,000, with small gains in a number of component industries. In 2012, factory employment increased by 180,000; most of the growth occurred during the first quarter.”

“In December, the average workweek for all employees on private nonfarm payrolls edged up by 0.1 hour to 34.5 hours. The manufacturing workweek edged up by 0.1 hour to 40.7 hours, and factory overtime was unchanged at 3.3 hours.”

While there are signs that manufacturing employment gains have slowed down in the second half, those were connected to the economic uncertainties tied to the Presidential Election, Fiscal Cliff, and Global Economic Slowdown. Two of these three special causes are now behind us.

As the graph above shows, Manufacturing is the place to look for employment gains.

The softness in manufacturing employment in the last half of 2012 belies the demand that our industry will have for talented workers going forward. As the BLS workweek hours indicate, Manufacturing currently is using overtime to meet its needs. Given demographic trends, current lean staffing, and the push to reshore production, any economic upturn at all will be strongly bullish for employment prospects in Manufacturing in 2013.

Improvements in Housing Markets are already visible and a 15+ million auto sales forecast are two indicators that suggest if you want to find a well paying job in 2013, Precision Machining (Advanced Manufacturing) is a great place to apply.

For information about careers in Precision Machining, check out our Career Resources Page on the PMPA Website.

Find a training program near you using PMPA’s Comprehensive Jobs Training Database.

I continue to speak with instructors, counselors, and officials at local community colleges across the country. They are unanimous in saying that their machining students “have multiple job offers before they graduate.”

Manufacturing Recovery 7 Months and Counting!

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11 industries reported expansion in February. The Precision Machined Products Industry, a sub industry of Fabricated Metals, serves 7 of these industries showing the greatest recovery.
Here are the sectors that reported expansion that precision machining serves:

Machinery;
Computer & Electronic Products;
Miscellaneous Manufacturing;
Transportation Equipment;
Electrical Equipment;
Appliances & Components;
Fabricated Metal Products;

Economic activity in the manufacturing sector expanded in February for the seventh consecutive month, and the overall economy grew for the 10th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business^®.
The PMI index for February was 56.5 down 1.9 percentage points from January. Because the PMI is above 50, the manufacturing economy is expanding.

vanillaicecream_coneboy — How can they run out of vanilla?

According to ISM steel, stainless steel, and aluminum are increasing in price.
Anecdotal data from our conversations with members confirms the ISM numbers, and points out that the metals named above are both more expensive and in short supply.
You know business is improving when they are out of plain vanilla.
Photocredit.