Wall Street Pump and Valve Industry Watch March 2012


Written by:
Jordan, Knauff & Company

The Jordan, Knauff & Company (JKC) Valve Stock Index was down 4 percent through the last 12 months, below the broader S&P 500 Index which was up 0.3 percent. The JKC Pump Stock Index was down 12.5 percent for the same time period.

Figure 1. Stock Indices from February 1, 2011 to January 31, 2012

Source: Capital IQ and JKC research. 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 and valve industries weighted by market capitalization.


The U.S. economy grew at its fastest pace in 18 months in the fourth quarter 2011, according to The Commerce Department. The 2.8 percent growth rate was an improvement over the third quarter’s 1.8 percent rate. Most of the growth was the result of consumer spending and companies rebuilding their inventories. One of the biggest drags on growth was federal, state and local government spending cuts. The full year growth rate of 1.7 percent was far below the 3 percent rate in 2010. The Federal Reserve Board estimates that the gross domestic product (GDP) will grow between 2.2 and 2.7 percent this year.

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

Source: U.S. Energy Information Administration and Baker Hughes Inc.

 

U.S. manufacturing began the year on a positive note, with new orders, production and employment all growing in January. The Institute for Supply Management’s Purchasing Managers Index (PMI) registered 54.1 percent in January, increasing 1 percentage point from December’s of 53.1 percent, with seven out of ten sub-components showing improvement. The New Orders Index increased 2.8 percentage points from December’s reading. However, prices for raw materials increased for the first time in four months.

The Commerce Department reported that factory orders increased for the second consecutive month in December, rising 1.1 percent, after posting an upwardly revised 2.2 percent gain in November. Shipments increased by 0.7 percent, the strongest increase since July 2011 when they expanded 1.2 percent.

U.S. employment numbers jumped significantly higher in January, with the unemployment rate dropping for the fifth consecutive month to 8.3 percent. According to the Bureau of Labor Statistics, employers added 243,000 jobs overall, while the manufacturing sector added 50,000 jobs. Manufacturing has accounted for 14 percent of all job gains during the last 13 months.

In the U.S., the number of oil and gas rigs in operation in January was 2,033, 17 percent higher than January 2011. Worldwide rigs totaled 3,751, 9 percent more than January 2011 counts. Both U.S. and worldwide rig counts are back to or slightly above pre-recession levels in September 2008.

Figure 3. U.S. PMI Index 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 and the S&P 500 Index surged in January, rising 3.4 percent and 4.4 percent, respectively. It was the best beginning to a year for the blue chip indices since 1997. The Nasdaq Composite was up 8 percent in January.

 

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.


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