by Jordan, Knauff & Company

The Jordan, Knauff & Company (JKC) Valve Stock Index was down 12.5 percent for 2011, well below the broader S&P 500 Index, down only 1.1 percent. The JKC Pump Stock Index was also down 19.2 percent. Both indices kept pace with the S&P 500 during the beginning of the year and then fell behind during the last five months of 2011.

The U.S. manufacturing sector continues to record modest gains. The Institute for Supply Management’s Purchasing Managers Index (PMI) rose to 53.9 in December from 52.7 in November. Production and employment came in at 59.9 and 55.1, respectively. Ten industries reported production gains in December—including primary metals, machinery, electrical equipment and computers. Export orders were up, suggesting less risk due to European debt worries. The New Orders Index increased 0.9 points to 57.6, a third month of growth after three months of contraction. Raw material prices decreased for the third month.

The latest National Association of Manufacturers (NAM) IndustryWeek Survey of Manufacturers suggests that manufacturers are more confident in the economy—80.2 percent recorded a positive outlook, up from September’s 65.4 percent. More than 72 percent of NAM members expect sales to increase over the next 12 months. About half expect 5 percent growth, and one out of five predicts growth will exceed 10 percent.

The Conference Board’s Consumer Confidence Index jumped to its highest level since April 2011, from 55.2 in November to 64.5 in December. Of the components that make up this index, perceptions about the current and future economic environment improved.

The Bureau of Labor Statistics reported that the economy added 200,000 jobs in December. The unemployment rate dropped to 8.5 percent, its lowest level since February 2009. Job gains occurred in transportation and warehousing, retail trade, manufacturing, health care and mining. Manufacturing employment expanded by 23,000.

Absent a significant oil supply disruption, the U.S. Energy Information Administration expects the recent tightening of world oil markets to moderate in 2012 then resume in 2013. World oil consumption grew an estimated 1 million barrels per day (BPD) in 2011 to 88.1 million BPD. This growth is expected to accelerate during the next two years with consumption reaching 89.4 million BPD in 2012 and 90.9 million BPD in 2013. U.S. rig counts increased during 2011, with 2,003 rigs in operation in December. Worldwide rig counts were 3,612 in December with an average of 3,466 rigs in operation in 2011.


Pumps & Systems, February 2012