Economic optimism is in its fourth month of decline, according to the Precision Metalforming Association (PMA) July 2002 Business Conditions Report. Conducted monthly, the Business Conditions Report is an economic indicator for the manufacturing industry, sampling 191 manufacturing companies. Figures for July indicate that manufacturers do not expect an economic upturn in the next few months.
When asked to predict the trend of general economic activity for the next three months, only 28% of respondents expected an increase in activity — down 8% from June and 30% from the peak of optimism in March of this year. Forty-nine percent predicted no change, and 23% predicted a further downward turn (a 10% increase from June). A year ago to date, 27% believed activity would go up, 51% thought it would stay the same, and 22% foresaw a further dip in economic activity.
Manufacturers blame overall economic slowdown and the recently imposed tariffs on foreign steel for exacerbating the already lagging manufacturing climate. Optimism about expected incoming orders continues to tumble as well. Only 31% of respondents expected to see an increase in incoming orders during the next three months, down 7% from June.
Forty-five percent projected no change in orders and 24% predicted a further decrease over the next three months. A year ago to date, 37% expected an increase in orders, 41% expected no change, and 22% expected orders to decrease.
On a more positive note, the percentage of companies with workforce on short time or layoff remains stable. Only 29% of participants reported plant workforce on short time or layoff for the month of July, down 1% from June. This figure compares to 44% on short time or layoff a year ago to date.