Metalforming firms expect downturn in fourth quarter

The monthly Business Conditions Report of the Precision Metalforming Association (PMA) (www.pma.org) says most companies surveyed (151 participants) expect a downturn in business conditions during the next three months. When asked about general trends in economic activity, only 17 percent of respondents expected improvement (down from 24 percent in September). 36 percent believe conditions will decrease (up from 27 percent last month) and 47 percent expect economic conditions to remain the same. According to PMA, the data indicates the lowest level of optimism since November 2001.
Forty percent of the metalforming companies surveyed also expect incoming orders to decline during the next three months (up from 29 percent in September), 24 percent expect an increase in orders and 36 percent expect no change. Twenty-one percent of the companies reported shipping levels above levels of three months ago and 33 percent reported lower shipping levels.
In response to the report, PMA President William E. Gaskin said, “The October data confirm an expectation by the metalforming industry for a significant decline in the overall economic outlook for the 4th quarter of 2006 and for business conditions in our industry. Significantly, approximately one-half of PMA members supply the automotive industry, so cutbacks in production announced by GM, Ford and Chrysler are reflected in their outlook. Slowdowns in housing starts and the related impact on shipments of durable goods are also a factor. The automotive situation, lower housing starts, plus a normal cyclical pattern of lower orders and shipments as year-end approaches due to the Thanksgiving, Christmas and New Year’s holidays would appear to be the primary drivers for the data.”

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