Metal fabricating by the numbers

June 1, 2011
By: Vicki Bell

Did you happen to see the article posted May 31 on about 10 interesting numbers in the U.S.? Among the numbers listed were 2.3 (milligrams of B1, the amount recommended during World War II for very active men after the Selective Service discovered that about one in seven armed forces candidates suffered from "disabilities directly or indirectly connected with nutrition"); $435 (the absurdly priced hammer that came to symbolize wasteful Pentagon spending in the 1980s); and 100-proof (the measurement that gets you drunk—interesting story how this came about).

Perhaps more interesting to those in manufacturing were the statistics released the same day by the National Association of Manufacturers (NAM) . The Monday Economic Report featured a chart showing the manufacturing sectors with the largest percentage of employment growth from December 2009 to April 2011.

Topping the chart was primary metals with a 9.86 percent growth for the period. Next was motor vehicles and parts at 7.77 percent, followed by computer and peripheral equipment, 7.23 percent; fabricated metal products, 7.07 percent; machinery, 6.23 percent; leather and allied products, 6.18 percent; semiconductors and electronic equipment, 5.59 percent; transportation equipment, 4.46 percent; electrical equipment and appliances, 3.72 percent; communications equipment, 3.60 percent; plastics and rubber products, 3.03 percent; computer and electronic products, 2.68 percent; petroleum and coal products, 1.80 percent.

In his commentary below the chart, NAM Chief Economist Chad Moutray noted that manufacturers remain positive overall about the next six months. He said that the two regional Federal Reserve surveys highlight this optimism, albeit with slight declines from the month before. "Unfilled orders remain high and are growing, and manufacturers continue to hire new workers, demonstrating the need for more labor with increased production. Greater demand for workers is translating into higher compensation, with wages and salaries up 12 percent in 2010 and up nearly 8 percent at an annual rate so far this year."

These numbers reported May 31 looked good, but today's numbers aren't quite as promising.

First up was the news that private employers added only 38,000 jobs in May. Economists surveyed by Reuters reportedly had forecast a gain of 175,000 jobs. This news doesn't bode well for the U.S. jobs report for May to be released June 3.

Adding to the disappointing numbers is the May 2011 Manufacturing ISM Report on Business®, released today. Although Economic activity in the manufacturing sector expanded in May for the 22nd consecutive month, and the overall economy grew for the 24th consecutive month, the PMI registered 53.5 percent, 6.9 percentage points below the April reading of 60.4 percent, the first reading below 60 percent for 2011 and the lowest PMI reported in the past 12 months.

According to a statement by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute of Supply Management™ Manufacturing Business Survey Committee, slower growth in new orders and production are the primary contributors to this month's lower PMI reading. However, manufacturing employment continues to show good momentum for the year, as the Employment Index registered 58.2 percent—4.5 percentage points lower than the 62.7 percent reported in April.

Of the 18 manufacturing industries, 14 reported growth in May, in the following order: Nonmetallic Mineral Products; Petroleum & Coal Products; Machinery; Transportation Equipment; Computer & Electronic Products; Textile Mills; Electrical Equipment, Appliances & Components; Primary Metals; Miscellaneous Manufacturing; Paper Products; Chemical Products; Plastics & Rubber Products; Apparel, Leather & Allied Products; and Fabricated Metal Products.

While still growing, Fabricated Metal Products is No. 14 in this list. In April, it was No. 5, and in March, No. 3. I don't care for this downward trend, which doesn't bode well for employment growth in this sector.

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Vicki Bell

Vicki Bell

FMA Communications Inc.
2135 Point Blvd
Elgin, IL 60123
Phone: 815-227-8209