The Jordan, Knauff & Company (JKC) Valve Stock Index was down 10.7 percent over the last 12 months, below the broader S&P 500 Index which was up 1.7 percent. The JKC Pump Stock Index was down 28.9 percent for the same time period.

 

Stock indices for the pump and valve industry

Figure 1. Stock Indices from May 1, 2011 to April 30, 2012

The Institute for Supply Management’s Purchasing Managers Index (PMI) fell from 53.5 in May to 49.7 in June. Readings over 50 suggest an expansion in the sector. Therefore, June’s PMI indicates a slight contraction. A sharp decline in new orders was responsible. The New Orders Index dropped 12.3 points, registering 47.8, indicating contraction for the first time since April 2009. New export orders also dropped below 50, while the Prices Index for raw materials decreased significantly for the second consecutive month. Overall, these numbers suggest that growth in the manufacturing sector has slowed. Europe's debt crisis is weighing on U.S. exports, which has slowed growth at U.S. factories.

US Energy Consumption and Rig Counts

Figure 2. U.S. Energy consumption and Rig Counts

The Labor Department reported that U.S. employers added only 80,000 jobs in June, a third straight month of weak hiring. The economy added an average of just 75,000 jobs per month in the April to June quarter, which is one-third of the 226,000 a month created in the first quarter 2012. Among the sectors adding jobs, manufacturers hired 14,000 workers, professional and business services added 47,000 jobs and food services added 15,100 jobs. The unemployment rate was unchanged at 8.2 percent.

After West Texas Intermediate (WTI) crude oil spot prices fell to a year-to-date low of $78 per barrel on June 21, oil prices rose following news of a possible Euro-zone agreement regarding debt issues. The U.S. Energy Information Administration (EIA) projects WTI crude oil spot prices to average about $88 per barrel during the second half of 2012 and $89 per barrel in 2013. China’s weakening exports and slower industrial and domestic growth could continue to place downward pressure on oil prices. EIA’s historical global supply and demand balance also shows signs of a looser market, as supply outpaced consumption by an average of 1.1 million barrels per day (bpd) for the first half of 2012. The EIA expects U.S. total crude oil production to average 6.3 million bpd in 2012, an increase of 0.6 million bpd over last year, and the highest level of production since 1997.

Figure 3. U.S. PMI Index and Manufacturing Shipments

On Wall Street, the Dow Jones Industrial Average jumped 3.9 percent in June to record its best June performance since 1997, while the S&P 500 recorded its best performance for June since 1999, up 4.0 percent. Posting an increase of 3.8 percent, the NASDAQ enjoyed its best June since 2000. Nonetheless, quarter-long concerns about Euro-zone debt and dismal global economic readings kept the benchmarks in the red for the second quarter.

These materials were prepared for informational purposes from sources that are believed to be reliable but which could change without notice. Jordan, Knauff & Company and Pumps & Systems shall not in any way be liable for claims relating to these materials and makes no warranties, express or implied, or representations as to their accuracy or completeness or for errors or omissions contained herein. This information is not intended to be construed as tax, legal or investment advice. These materials do not constitute an offer to buy or sell any financial security or participate in any investment offering or deployment of capital.