The reader's e-mail request led off with a commonly seen note that his company was reworking its Web site, but it ended with a not-so-common question: What is the best barometer to indicate that the recession has ended in metal manufacturing? The e-mail writer wanted to link to some of these sources on the company's Web site.
A good question required a thoughtful answer, so I started thinking. Then I started searching. Then I started wondering: How do you find common barometers for companies in the metal fabricating industry, which are alike in the processes they employ but different in the diverse customers they serve? The answer was that any type of economic barometer would have to be pretty generic.This is how I responded:
- Institute for Supply Management index. The index, which was at 61.4 in February 2011 (anything over 50 is indicative of market expansion), is a useful snapshot of the overall health of the manufacturing industry. It suggests that the overall manufacturing economy has grown for the 21st consecutive month and that exports are driving new orders and production increases. The downside of the index is that it covers so many industry segments—18 in all, including apparel, leather, and allied products; beverage and tobacco products; and paper products.
- The Federal Reserve's updates on industrial production and capacity utilization. I like these documents the best. You can drill down and get a good idea about how the fabricated metal products sector, which is arguably the heart of the metal fabricating industry, is performing. From February 2010 to February 2011, the sector has gained a 12.4 percent uptick in production. When you look at capacity utilization, you'll see the sector reached 78.8 percent, which is just above the 77.3 percent average from 1972-2010. Those numbers are positive economic indicators.
- The Federal Reserve's Beige Book. This collection of anecdotal information, published eight times a year, is a nice picture of economic activity in each of the Federal Reserve's 12 districts. It provides a window into specific geographic areas. However, it isn't directly related to metal fabricating, and it isn't the most timely of economic updates.
- U.S. Census Bureau. The Census Bureau's collection of economic indicators is fairly thorough. Not only does it track manufacturing inventories, sales, and shipments, it links to other useful statistical areas, such as housing starts and building permits.
Obviously, metal fabricators would like more forward-looking information sources, but those are hard to find. If anyone really had access to those types of seers, they probably wouldn't be at the shop, but rather at the horse track.