The Metalworking Economy: Expectations and Observations at Odds
Even though most economists are demonstrating that the global economy’s growth trends are leveling off, machine shop owners still seem to be showing signs of business optimism.
“Has growth peaked?” reads a headline from The Washington Post this month. The Guardian says “the global economy is slowing down.” Likewise, Reuters reports that economic forecasters are cutting global economic growth in their 2019 analyses.
But for many—including, it seems, those in the U.S. metalworking sector—spirits, if not expectations, are more optimistic about the short-term economic future.
I chatted with Michael Guckes about this. He is one of my colleagues and chief economist with the Gardner Intelligence division of Modern Machine Shop’s publisher, Gardner Business Media. Based on the data he works with, Mr. Guckes concurs with recent reports from economists like those above. Growth is slowing (which is not the same as contracting).
“Yet, if you look at our Employment and Future Business Expectation measures,” he says, “you will see that there is still a lot of optimism out there among metalworking job shop owners and managers.” Future business expectations from metalworking job shops remain very high, according to Mr. Guckes, especially when compared with readings that precede this most recent economic expansion, which started back in 2017.
Additionally, despite much handwringing over the so-called skills gap in manufacturing, metalworking shop owners are reporting employment figures that Mr. Guckes suggests would be much lower if they believed a recession was on the horizon.
These two economic measures—business expectations and employment—can be a helpful gage of how shop owners and managers view their economic situation. Business expectations are, of course, based on opinions and predictions as well as observations; but employment represents a concrete and risk-laden long-term investment, one that requires a certain level of confidence.
Time will tell what 2019 has in store for the manufacturing economy, and whether shop owners’ risks and expectations will be respectively rewarded and confirmed. As the months unfold, be sure to pay attention to Mr. Guckes’ column at the end of each print issue of Modern Machine Shop tracking the Gardner Business Index: Metalworking, which uses six different economic measures to chart the ups and downs of this cyclical industry.