Metal forming companies expect business conditions to dip during next three months

According to the June 2010 Precision Metalforming Association (PMA) Business Conditions Report, metal forming companies expect business conditions to dip during the next three months, an indication of the summer slowdown typically experienced by the industry. Conducted monthly, the report is an economic indicator for manufacturing, sampling 131 metal forming companies in the United States and Canada.

The June report shows that 24 percent of participants expect an improvement in economic activity during the next three months (down from 42 percent in May), 59 percent predict that activity will remain unchanged (up from 48 percent last month) and 17 percent report that activity will decline (up from 10 percent in May).

Metal forming companies also anticipate a modest softening for incoming orders, although 30 percent of participants forecast an increase in orders for the next three months (down substantially from 46 percent in May). Forty-seven percent of companies expect no change (compared to 39 percent the previous month) and 23 percent predict a decrease in orders (up from 15 percent in May).

However, average daily shipping levels remained fairly steady in June. Forty-eight percent of participants reported that average daily shipping levels are above levels of three months ago (down from 54 percent in May), 43 percent report no change (compared to 34 percent in May) and nine percent report that shipping levels are below levels of three months ago (down from 12 percent in May).

The percentage of metal forming companies with a portion of their work force on short time or layoff dropped again in June, with only 27 percent of companies reporting workers on short time or layoff, compared to 30 percent in May. This marks the lowest level since September 2008.

"The metal forming industry appears to be reacting to seasonal business trends and continuing concern about the strength of the economic recovery due to slow job growth, a cautious consumer, credit issues and perhaps from uncertainties from the Gulf oil spill," said William E. Gaskin, PMA president. "The outlook for new orders remains strong, even though it is somewhat softer than it has been over the past few months. The June 2010 outlook for new orders is almost precisely at the average levels of the past 30 years – which reflects 32 percent anticipating an increase (versus 30 percent this year); 45 percent expecting no change (versus 47 percent in 2010) and 23 percent expecting a decrease (identical to 2010 levels). And only 9 percent of members anticipate that their shipments during the next three months will decline over their current levels."