Production Machining

JUL 2013

Production Machining - Your access to the precision machining industrial buyer.

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BY THE NUMBERS May Marks Third Month of Contraction ith a reading of 47.9, Gardner's precision machining index showed that business activity contracted faster in May. While the industry has contracted the last 3 months, the contraction has been relatively mild compared with what the industry saw in the second half of 2012. Tere continues to be a signifcant gap in performance between shops with more than 50 employees and shops with fewer than 50 employees. In fact, the gap grew even wider in May. Te largest shops, those with more than 250 employees, recorded their highest growth rate since March 2012. On the other hand, the smallest shops, those with fewer than 19 employees, recorded their fastest rate of contraction since December 2012. New orders contracted for the second month Production has in a row. Basically, new expanded at a orders are only contracting consistent rate for the at the smallest facilifourth straight month. ties. Production has expanded at a consistent Employment grew for rate for the fourth straight the ffth month in a month. Employment grew row. for the ffth month in a row. Supplier deliveries continued to lengthen, but at their slowest rate since October 2012. Te overall industry index is being hurt the most by backlogs, which contracted at their fastest rate in May since December 2012. Backlogs have been contracting since April 2012. Te W STEVEN R. KLINE, JR. Market Analyst Gardner Business Media Inc. gardnerweb.com/economics/blog likely reason for this is the signifcant amount of capitalpurchased precision machining facilities since 2010. Exports are weighing heavily on the overall index as well. Te relatively strong dollar is making American exports more expensive. Material prices continue to increase, but the rate of increase was the slowest since November 2012. Prices received grew for the fourth time in 5 months. Future business expectations were relatively unchanged in May. Tey are noticeably higher than the second half of 2012, but still well below the levels of the frst quarter of 2012. Only two regions saw growth in May—New England and the east south central. Te south Atlantic and west north central regions were fat. All other regions contracted with the performance in the Pacifc and west south central regions falling of markedly. With new orders declining the last 2 months and the prolonged contraction in backlogs, shops are pulling back on their capital spending plans. Planned capital spending for the next 12 months fell to its lowest level since November 2012. Production Machining Sub-Indices May April Change Direction Rate Trend New Orders 47.7 47.3 0.4 Contracting Slower 2 Production 51.2 51.3 -0.1 Growing Slower 2 Backlog 39.3 42.4 -3.1 Contracting Faster 14 Employment 50.9 50.4 0.5 Growing Faster 5 Exports 46.7 45.3 1.4 Contracting Slower 18 Supplier Deliveries 51.9 52.6 -0.7 Lengthening Less 7 Material Prices 55.5 55.7 -0.2 Increasing Less 10 Prices Received 50.7 49.8 0.9 Increasing From Decreasing 1 Future Business Expectations 61.4 61.0 0.4 Improving More 18 Production Machining Business Index 47.9 48.2 -0.3 Contracting Faster 3 64 PRODUCTION MACHINING :: JULY 2013

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