Quality Magazine

PMA Report Finds Manufacturers Cautious as Economy Improves

September 21, 2009

CLEVELAND, OH-According to the September 2009 Precision Metalforming Association (PMA) Business Conditions Report, metalforming companies are somewhat less optimistic about the trend in general activity and in their expectations for new orders over the next three-month period than they were one month ago. Conducted monthly, the report is an economic indicator for manufacturing, sampling 148 metalforming companies in the United States and Canada.

Following three months of steadily increasing optimism, the September report indicates a more cautious view. Forty-seven percent of participants anticipate an improvement in overall economic activity (down from 57% in August), 42% expect that activity will remain unchanged (compared to 35% last month) and 11% report that activity will decline (compared to eight percent in August).

Metalforming companies also signaled a more cautious approach in their expectations for incoming orders during the next three months. Fifty-one percent predict an increase in orders (down from 62% in August), 35% expect no change (up from 27% the previous month) and 14% of companies anticipate a decrease in orders (up from 11% in August).

However, there was a sharp increase in the percent of companies reporting a rise in their current average daily shipping levels. Fifty-three percent of participants report that shipping levels are above levels of three months ago (compared to 39% in August), 30% report no change (down from 37% in August) and 17% report that shipping levels are below levels of three months ago (down from 24% reported last month).

The number of metalforming companies with a portion of their workforce on short time or layoff decreased to 68% in September, down from 72% in August. While this is the lowest level since January 2009 when 64% of companies had workers on short time or layoff, it is substantially higher than September 2008 (26%). It also reflects that some companies have permanently downsized their workforce, eliminating plans to recall workers previously considered temporarily laid off.

“Metalforming companies are being very cautious about how robust a recovery they are anticipating,” says William E. Gaskin, president of PMA. “While most companies have seen orders and shipments rise over the past few months, they are concerned that this is a temporary situation which may plateau in the fourth quarter and which is unlikely to gain significant momentum in at least the first quarter of 2010. They are concerned that the current uptick in orders and shipments may be related to inventory rebuilding by their customers and not tied to actual growth in demand for customers’ products.”

The monthly Business Conditions Report has been conducted by PMA since 1979. Full report results are available at www.pma.org/about/stats/BCreport.