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Manufacturing Production Orders Show Strong Signs

Posted 8:47 PM by

Bloomberg reports, "Machinery stocks may outperform the market through the end of the year as new orders rebound, helping to defy concerns about another U.S. recession."

This sentiment is supported by many analysts, including Stephen Volkmann, an analyst for New York Based Jefferies & Co. "There’s skepticism about the industrial economy and machinery stocks, but robust activity suggests the risk of a double-dip recession is less likely. The sector may continue to rally through December, as it has tended to outperform from November through year-end during the past decade."

Many companies such as Parker Hannifin Corp. (PH) and Caterpillar Inc. (CAT) are actually raising their forecasts for the end of 2011. Caterpillar's chairman and CEO Doug Oberhelman said in a statement, “Although there is a good deal of economic and political uncertainty in the world, we are not seeing it much in our business at this point. This was the best quarter for sales in our history, and our order backlog is at an all-time high.”

While there is still continued concern over various international and domestic issues, such as the weak U.S. housing market, and the debt crisis in Europe recent data shows that their are still manufacturing profits to be made and that the manufacturing sector still has the potential for growth.

About the Author

Justin Hayes is a director in Katz, Sapper & Miller’s Audit and Assurance Services Group as well as being a member of the Not-for-Profit and Governmental Services Groups. Justin works with clients to help them avoid risk and maximize efficiencies by keeping an eye on their bottom line and helping ensure accurate financial reporting. Connect with him on LinkedIn.

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