August business conditions report: Metal forming companies expect business conditions to remain fairly steady during next three months

According to the August 2010 Precision Metalforming Association (PMA) Business Conditions Report, metal forming companies expect business conditions to remain fairly steady during the next three months. Conducted monthly, the report is an economic indicator for manufacturing, sampling 130 metal forming companies in the United States and Canada.

The August report shows that 25 percent of participants expect an improvement in economic activity during the next three months (up from 23 percent in June), 58 percent predict that activity will remain unchanged (down from 61 percent last month) and 17 percent report that activity will decline (up from 16 percent in July).

More than one-third of metal forming companies forecast increased orders for the next three months. Thirty-eight percent of participants expect an increase in orders (up from 29 percent in July), 44 percent anticipate no change (compared to 51 percent last month) and 18 percent predict a decrease in orders (down from 20 percent in July).

However, the percentage of companies reporting decreased shipping levels grew in August. Only 22 percent of participants report that average daily shipping levels are above levels of three months ago (down from 34 percent in July), 41 percent report no change (compared to 54 percent in July) and 37 percent report that shipping levels are below levels of three months ago (up significantly from 12 percent in July).

The percentage of metal forming companies with a portion of their workforce on short time or layoff dropped to 22 percent in August from 27 percent in July. This marks the lowest level since May 2008.

"Metal forming companies experienced strong increases in orders and shipments during the first half of 2010 from the very low levels of 2009," said William E. Gaskin, PMA president. "While the typical company now has experienced 12 months of new orders and 11 months of shipments above their 12-month rolling average, PMA's August report indicates a cautious outlook for shipments during the next several months. However, the report also reflects that expectations for new orders into the 3rd quarter are fairly strong, with 82 percent expecting orders at the same or higher levels for the next three months." Gaskin also noted that the recent surge in imported manufactured products from China was a growing concern among PMA member companies. He called on Congress and the Administration to act swiftly to mandate that China accelerate market adjustments of the value of its currency, allowing the value of the yuan to adjust against the dollar based on market factors.