Pump Market Analysis
by Jordan, Knauff & Company
December 15, 2017

The Jordan, Knauff & Company (JKC) Valve Stock Index was up 22.9 percent over the last 12 months, while the broader S&P 500 Index was up 21.9 percent. The JKC Pump Stock Index increased 17.4 percent for the same time period.1

The Institute for Supply Management’s Purchasing Managers’ Index (PMI) lost 2.1 percentage points in October but still posted a solid number of 58.7 percent. The Production Index lost 1.2 percentage points but is still above 60 percent and has been for five consecutive months. The New Orders Index also lost 1.2 percentage points, but at 63.4 percent, it suggests that future orders may remain strong in the coming months. Of the 18 manufacturing segments in the survey, 15 reported employment growth in the month, while the Employment Index fell 0.5 percentage points.

Figure 1. Stock indices from November 1, 2016 to October 31, 2017Figure 1. Stock indices from November 1, 2016 to October 31, 2017

The Consumer Confidence Index rose 5.3 points in October reaching 125.9 percent, its highest level since December 2000. Over the past year, consumer confidence has risen 24.9 percent. Consumers’ views on the labor market have improved with the proportion of consumers believing jobs are plentiful, growing 43.5 percent over the year. The number of consumers expecting more jobs to be created over the next six months rose 35.4 percent, while the proportion expecting fewer jobs to be created tumbled 28.9 percent.

The U.S. gross domestic product (GDP) rose 3 percent in the third quarter of the year despite the effects of two hurricanes. Consumer spending rose at a 2.4 percent rate after a 3.3 percent gain in the second quarter. Business investment rose 3.9 percent. Government spending was also up following the hurricanes. Housing investment was down for the second quarter in a row.

Figure 2. U.S. energy consumption and rig countsFigure 2. U.S. energy consumption and rig counts

The Federal Energy Regulatory Commission (FERC) approved five new pipeline projects in the Northeast in October, the first projects to be approved since February. The approvals ended a six-month period when FERC was unable to issue certificates to allow construction of interstate energy transmission infrastructure when the number of commissioners fell below the required minimum. The five new projects will increase the delivery capacity from the Northeast’s Utica and Marcellus natural gas producing regions.

As of the end of October, there were 46 pipeline projects with FERC applications in process and 12 projects with pre-filing applications submitted. Covering more than 2,500 miles of both new and upgraded pipeline construction, the capacity of these projects totals about 40 billion cubic feet per day. Located in Texas, Louisiana and Oklahoma, six of the projects are intended to support liquefied natural gas export projects.

Figure 3. U.S. PMI and manufacturing shipmentsFigure 3. U.S. PMI and manufacturing shipments

On Wall Street the Dow Jones Industrial Average rose 4.3 percent, the S&P 500 Index increased 2.2 percent and the NASDAQ Composite grew 3.6 percent for the month of October. The Dow Jones closed above 23,000 points for the first time in its 120-year history. The tech heavy NASDAQ increased as much as 15 percent over the year supported by the earnings of major tech stocks such as Facebook and Amazon. Overall, the sector gained almost 7.7 percent in October.