If you didn’t attend FABTECH® 2010 (held in Atlanta Nov. 2-4), you missed quite an expo. As my colleague Vicki Bell described it in a recent blog, “So little time and so much to see.”
That’s an understatement. It had more than 1,000 exhibits; if you had spent five minutes at each booth, it would have taken more than 11 days to see them all. Lots of new products, many educational sessions, a couple of keynote presentations, and a great deal of optimism for 2011 characterized the show.
Another colleague, Tim Heston, expanded on that thought when he equated the expo to a physical exam. In his view, FABTECH reflects the industry’s health just as a physical does for a patient. The cheerful, hopeful mood reflected a common feeling that 2011 would be a good year indeed.
Fair enough. The patient said he was feeling pretty good, and judging by the number of exhibitors, net square footage of booth space, and number of attendees (1,138; 370,500; and 22,000, respectively), the patient is quite healthy. Now let’s look beneath the surface and see what we can learn from an X-ray. With a bit of luck we’ll find something that tells us whether the industry’s good health is going to last.
First, let’s look at the PMI, a manufacturing-focused indicator tracked by the Institute for Supply Management. The PMI has been higher than 50 since August 2009 (a reading above 50 indicates that manufacturing is growing).
This is a huge improvement over December 2008, when it hit a trough of 32.5. In fact, through all of 2010 it dipped below 55 just once, slipping to 54.4 in September. It popped back up, to 56.9, in October. One of the PMI’s components is New Orders, which has a predictive element to it. It was above 55 for a year, July 2009 to June 2010. It slipped to 51.1 in September, then shot up to 58.9 in October.
The U.S. Census Bureau’s data roughly concurs with the ISM’s data. New orders for durable goods have been climbing more or less steadily for more than a year. They totaled $161 billion in March 2009, and broke through $200 billion in September 2010.
The housing sector isn’t helping manufacturers at all, but it might not be as big a hindrance as it once was. The annualized rate of home construction (measured by building permits) was more than 2,000,000 for much of 2004 and 2005; it hit a low of 547,000 in September 2010. It came up slightly, to 550,000, in October.
What about the unemployment rate? It peaked at 10.1 percent in October 2009 and has barely moved (it was 9.6 percent in October 2010). However, a closer look reveals good news. Manufacturers started hiring production employees earlier this year, and the number climbed from 8.11 million to 8.17 million from January to October—not substantial, but moving in the right direction. Likewise, the number of construction workers has been on the upswing for three months (August through October).
In summary, the patient’s X-rays look pretty good.