Metal forming companies expect spike in business conditions in next three months

August 20, 2009

According to the August 2009 Precision Metalforming Association (PMA) Business Conditions Report, metal forming companies predict a spike in business conditions during the next three months. Conducted monthly, the report is an economic indicator for manufacturing, sampling 137 metal forming companies in the United States and Canada.

The August report shows that metal formers are feeling more optimistic about general economic activity than they have since February 2004. Fifty-seven percent of participants anticipate an improvement in overall economic activity (up from 37 percent in July), 35 percent expect that activity will remain unchanged (compared to 47 percent last month) and only eight percent report that activity will decline (compared to 16 percent in July).

A high percentage of metal forming companies also forecast an increase in incoming orders during the next three months. Sixty-two percent predict an increase in orders (up from 46 percent in July), 27 percent expect no change (down from 39 percent the previous month), and 11 percent of companies anticipate a decrease in orders (compared to 15 percent in July).

Current average daily shipping levels also increased in August. Thirty-nine percent of participants report that shipping levels are above levels of three months ago (compared to 31 percent in July), 37 percent report no change (up from 32 percent in July) and 24 percent report that shipping levels are below levels of three months ago (down from 37 percent reported last month).

The number of metal forming companies with a portion of their work force on short time or layoff decreased to 72 percent in August, down from 81percent in July. While this is the lowest level since January 2009 when 64 percent of companies had workers on short time or layoff, the level remains at a substantially higher rate than August of 2008 (25 percent). The decrease may also reflect that companies have eliminated the positions of employees formerly on layoff status but whom they do not plan to recall in the near future.

"PMA member companies have moved sharply from the 'down' and 'same' categories to the 'up' category of optimism regarding current business conditions and their expectations for incoming orders and shipments," commented William E. Gaskin, PMA president. "Data from this month's survey corroborates the trend reported in the PMA June orders and shipments report, which demonstrated that the typical PMA member company has incoming orders that have now crossed the 12-month rolling average of orders (which had been declining for the past year) and that shipments will soon do the same."