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Metal forming companies increasingly optimistic; majority expect uptick in orders

According to the January 2010 Precision Metalforming Association (PMA) Business Conditions Report, metal forming companies are increasingly optimistic as the new year kicks off. Conducted monthly, the report is an economic indicator for manufacturing, sampling 141 metal forming companies in the United States and Canada.

The January report shows that 45 percent of participants expect an improvement in economic activity during the next three months (a jump from 28 percent in December), 45 percent predict that activity will remain unchanged (compared to 50 percent last month) and only 10 percent report that activity will decline (down from 22 percent in December).

A majority of metal forming companies also anticipate an uptick in incoming orders during the next three months. Increased orders are expected by 52 percent (up from 35 percent in December), 38 percent expect no change (compared to 40 percent the previous month) and only 10 percent predict a decrease in orders (down from 25 percent in December).

Expectations for current average daily shipping levels remained fairly steady in January with more than half of responding companies indicating that expectations for shipments remained the same. Thirty-three percent of participants report that shipping levels are above levels of three months ago (down from 37 percent in December), 53 percent report no change (compared to 36 percent in December) and 14 percent reported that shipping levels are below levels of three months ago (down from 27 percent in December).

The number of metal forming companies with a portion of their work force on short time or layoff dipped to 52 percent in January, down from 56 percent in December. This is the lowest level since November 2008 when 42 percent of companies had workers on short time or layoff.

"PMA members continue to report that business conditions are improving and the January report reinforces their optimism for increased orders and shipments in the months ahead," said William E. Gaskin, PMA president. "Beginning in mid-summer, the order books of PMA member companies began to grow with orders and shipments rising above their respective 12-month rolling averages in September through November (the most recent month for which PMA has data). January's numbers for orders, with 52 percent expecting increases and only 10 percent anticipating decreases, is the most positive report in several years. Most metal forming companies have reduced their costs dramatically and are beginning to return to profitability," he concluded.