M&A News – Industrials Industry

M&A News – Industrials Industry

By John Hammett

June 16, 2016

industrials industryM&A activity for North American based target companies in the Industrials industry for Q1 2016 included 216 closed deals, according to data published by industry data tracker FactSet.  The average transaction value was $126 million.

US production of manufactured goods increased 1.8% in February 2016 compared to the same month a year earlier. February’s rise represented the third consecutive monthly gain in US manufacturing output, which some economists are viewing as a sign that the sluggishness of the US manufacturing sector may be easing, according to the Wall Street Journal. US manufacturing growth has been hindered in recent months by weak global demand, a strong dollar that makes US goods more expensive in overseas markets, and low oil prices. The February gains in manufacturing production were led by motor vehicles and parts, which saw a 9.1% rise compared to February 2015. Growth in other key segments of the US manufacturing sector was muted in February. Consumer goods production rose 1.1%, while that of computer and electronic products saw a 1.5% gain. Production of industrial equipment declined 3.7%. Continued soft demand for US exports may prompt manufacturers to reduce their inventories, which could create further ripples of demand weakness within the overall manufacturing sector.

Industry Indicators

  • Total US manufacturers’ shipments, which indicate manufacturing sector activity, fell 2.2% year-to-date in February 2016 compared to the same period in 2015.  In combination with the increase in production (see above), this indicates a significant increase in inventories in the sector.  If this isn’t followed by a pickup in shipments in the coming months, industrial producers will have to cut back on production again. Total US wholesale sales of durable goods, a potential measure of industrial demand, rose 1.5% in November 2015 compared to the same month in 2014.
  • The spot price of crude oil, which indicates energy prices paid by manufacturers, fell 29.1% in the week ending April 8, 2016, compared to the same week in 2015.

Posted by John Hammett.

Read the Entire Industrials M&A 2nd Quarter Newsletter Here