SGIA just released its Industry Pulse Benchmarking Report for the third quarter of 2012. The purpose of the report is to provide specialty imaging companies with information they can use to compare their business with the broader community. To do so, SGIA created five industry indexes: Sales, production, employment, confidence and purchases. In short, the indexes are determined by averaging the differences between positive and negative responses in each index area, then calculating the index on a scale of -100 to +100. The data is further divided based on five revenue categories. The information discussed below presents data for the entire sign and graphics industry.
Sales Index: +48.7
Domestic U.S. sales in the sign and graphics segment remained essentially strong throughout the first three quarters of the year, though the sales index dipped slightly during what was a rather soft second quarter. Sixty-five percent of respondents said their sales in the third quarter increased over the second, and 57 percent expect their sales in the fourth quarter to be better than those in the third.
Production Index: +46.7
For the purposes of this survey/report, production is based not on the dollar value of shipments, but on the actual amount of product shipped. Production in the sign and graphics segment has remained both positive and steady throughout the year (the total variation is less than 1.5 points on our scale), and optimism is strong. Sixty-two percent reported production in the third quarter increased over the second, and 57 percent expected production in the fourth quarter to increase over the third.
Employment Index: +18.2
For this survey/report, respondents were asked to consider both permanent and temporary or seasonal employees. In keeping with the broader U.S. economy, employment figures in this industry segment are soft, but still on the positive side of our scale. That said, it is the weakest number reported among the indexes shown here. While employment dipped slightly during the second quarter, it grew during to third enough to exceed the first. Sixty percent reported their employment levels in the third quarter were unchanged as compared to the second. Seventy percent expect it to be unchanged in the fourth.
Confidence Index: +30.5
The confidence index is an interesting measure, as it is a composite of responses to questions about confidence in the specialty graphics industry, and of the U.S. economy. While confidence dipped strongly during the second quarter (down to +11.8), it rebounded in the third quarter to within five points of its first quarter measure. Sixty-six percent of respondents felt the direction of the industry was positive, and an impressive 96 percent felt it was either positive or neutral. Conversely, only 32 percent felt positive about the direction of the U.S. economy; 34 percent felt the direction was negative.
Purchases: +39.6
SGIA's purchase index is a composite of actual purchases made during 2012 compared with plans to purchase in the year ahead. For this survey/report, purchases are defined as new or used equipment utilized directly in the manufacturing process, costing more than $5,000, and excluding office equipment. Using that criteria, 41 percent of respondents said they purchased equipment during the third quarter of this year, and 79 percent reported plans to purchase in the next year. The purchase index number shown here marks a roughly 14 point decline over figures reported in the first and second quarters, demonstrating a softening in purchase activities during the third quarter (though still strong).
The Take Away
As an industry segment, the graphics and sign community is operating on firm ground after a rather soft second quarter of the year. Sales and production indexes have remained relatively steady-and strong-throughout the year. Employment, while soft, had its strongest showing of the year during the third quarter. Purchases lagged slightly. While confidence in this segment is positive, it is tempered significantly by continued uncertainty about the U.S. economy. However, confidence has improved significantly over the second quarter.
Strength Within the Segment
As stated earlier, the SGIA report further divides the sign and graphics segment into five categories based on annual revenue. In all categories except one (employment), the largest companies in this segment-those with annual revenue in excess of $10 million-had the highest index numbers, representing undeniable strength within this category. The industry's smallest companies-those with annual revenue less than $250,000 (let's call them micro-businesses)-had the weakest showing.
As the organization representing the specialty graphics industry, SGIA collects and analyzes a broad range of data about this segment. Full Benchmarking Reports are available free to SGIA members. To access SGIA's Benchmarking Reports, or to learn more about SGIA's industry data collection efforts, visit http://www.sgia.org/surveys_and_statistics.