The Jordan, Knauff & Company (JKC) Valve Stock Index has risen 47% in the past 12 months, while the broader S&P 500 Index has risen 27.4%. The JKC pump stock index rose 45% over the same period. 1
The Purchasing Managers Index (PMI) of the Institute of Supply Management rose to 61.1% in September. The biggest market segment growth is the supplier delivery index which has risen by 3.9 points, which rises when factories have to wait longer for supplies. Eight out of 10 respondents in almost all industries mentioned supply chain and procurement issues. The production index fell to 59.4%, and the backlog of orders fell 3.4 percentage points.
The price paid index rose to 81.2%, and 17 of the 18 manufacturing industries reported paying higher prices for inputs. For manufacturers who continue to work hard to fill job vacancies, labor is another issue. Transportation, food and beverages, papermaking, and machinery specifically pointed to labor challenges as the constraints on their activities.
The JP Morgan Chase Global Manufacturing Purchasing Managers Index was 54.1% in September, which was the same as the six-month low in August. European manufacturing accounts for 9 of the 10 best growth figures. The weaker performance is generally seen in Asia. Thailand, Malaysia, Myanmar, Vietnam, Mexico and Russia have readings below 50%.
The average spot price of Brent crude oil in August was US$71 (b) per barrel, which was a slight decrease from July, but rose by US$26/barrel from August last year. Due to the steady consumption of global oil inventories, Brent crude oil prices have risen in the past year. The US Energy Information Administration expects Brent crude oil prices to remain near current levels for the rest of 2021. The production growth of OPEC countries, the United States tight oil and other non-OPEC countries will exceed the growth rate of the slowdown in global oil consumption in 2022, which is expected to cause the price of Brent crude oil to drop to an average of US$66 per barrel per year.
As of the week of September 10, Cushing, Oklahoma’s crude oil inventories totaled 32.9 million barrels, accounting for 14% of the working storage capacity of U.S. commercial tanks and underground crude oil, a 42% decline since the beginning of 2021. Cushing's inventory is 26% below the average for the first five years at this time of year.
The 35 million barrels (equivalent to 1.2 million barrels per day) drop in June 2021 is the largest drop in US crude oil inventories (including crude oil in the Strategic Petroleum Reserve) since data collection began in 1981.
On Wall Street, all major indexes fell in September. The Dow Jones Industrial Average fell 4.3%, the S&P 500 fell 4.8%, and the Nasdaq Composite fell 5.3%. In the third quarter of this year, the Dow Jones Index fell 1.9%, while the S&P 500 Index and Nasdaq Index rose 0.2% and 0.4%, respectively. Inflation concerns put pressure on investors, while supply chain constraints, especially chip and labor shortages, put pressure on the economy.
Standard & Poor's return data is provided by Capital IQ.
Jordan, Knauff & Company is an investment bank based in Chicago, providing M&A advisory services for the pump, valve and filtration industries. Please visit www.jordanknauff.com for more information. Jordan, Knauff & Company is a member of FINRA.