The Employment Index experienced the largest drop of the month falling to 50.9%.
Jordan, Knauff & Company

The Jordan, Knauff & Company (JKC) Valve Stock Index was up 55.3% over the last 12 months, and the broader S&P 500 index was up 37.5%. The JKC pump stock index rose 62.7%.1  

The Institute for Supply Management’s Purchasing Managers Index (PMI) increased to 61.2% in May. At 67.0%, the New Orders Index is at a roughly 17-year high.

stock chart
IMAGE 1: Stock Indices from June 1, 2020, to June 1, 2021. Local currency converted to USD using historical spot rates. The JKC Pump and Valve Stock Indices include a select list of publicly traded companies involved in the pump & valve industries, weighted by market capitalization. Source: Capital IQ and JKC research. 

Supplier deliveries reached the highest level since 1974 moving to 78.8%. Long wait times are having a predictable effect on output as the Production Index fell to 58.5% from 62.5%. The Employment Index experienced the largest drop of the month falling to 50.9%. Although the Prices Paid Index fell in May, at 88.0%, price pressure is still intense.

Employers added 559,000 new jobs in May with overall jobs still 7.6 million short of pre-pandemic levels. The manufacturing sector added 23,000 net jobs led by auto manufacturing, where employers added 25,000 workers. This suggests some of the semiconductor-related supply constraints in the sector may be starting to ease.

Private service employers added 489,000 jobs, led by leisure and hospitality at 292,000. Construction hiring fell for the second-consecutive month, with payrolls falling 20,000. Despite the demand for workers, labor force participation fell to 61.6% and continues to be well below its pre-pandemic rate. Falling participation contributed to the unemployment rate dropping to 5.8% from 6.1%.

rig counts
IMAGE 2: U.S. energy consumption and rig counts. Source: U.S. Energy Information Administration and Baker Hughes Inc.

2020 marked the largest annual decrease in U.S. energy production on record, with the economic responses to the pandemic driving most of the decrease. Down more than 5% from 2019’s record high, with a drop from 101.3 quads in 2019 to 95.8 quads in 2020 in absolute terms.

U.S. crude oil production fell by 8% after reaching a record high in 2019. Natural gas dry production increased in eight of the previous nine years and hit a record high in 2019. It decreased by 2% in 2020. Production of natural gas plant liquids increased by 7%.

Renewable energy production increased by 2% between 2019 and 2020 to a record high of 11.8 quads, primarily due to increased electricity generation from wind and solar. U.S. coal production fell by 25%, its largest annual decrease on record. 

Brent crude oil prices were higher in May as global oil inventories continued to decline but at a slower pace than in the first four months of the year. Brent crude oil spot prices averaged $68 per barrel in May, up $4 per barrel from April. It is expected that Brent prices will remain near current levels in the third quarter and fall to an average of $60 per barrel in 2022.

pmi shipments
IMAGE 3: U.S. PMI and manufacturing shipments. Source: Institute for Supply Management Manufacturing Report on Business and U.S. Census Bureau

On Wall Street, the Dow Jones Industrial Average was up 1.9% in May, the S&P 500 Index rose 0.6% and the NASDAQ Composite was down 1.5%. Core personal consumption expenditure (PCE) inflation (which excludes food and energy prices) climbed 3.1% in April and 1.9% in March, showing the highest monthly gain in 29 years.  

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