Instrument prices on the rise

After falling 0.9% in June 1999, prices for products made by the process control instruments (SIC 3823) industry rose 0.7% in December 1999. This increase was the largest monthly hike since November 1997.

03/01/2000


After falling 0.9% in June 1999, prices for products made by the process control instruments (SIC 3823) industry rose 0.7% in December 1999. This increase was the largest monthly hike since November 1997. Given the pace of manufacturing cost escalation, factory managers who are buying process control instruments may want to brace for more price hikes ahead. To justify their prices, suppliers will argue that their costs have been rising faster than the prices they charge. Over the last 12 mo, this is true; industry prices are up 0.8% while costs grew 1.5%. But when we look at 2 yr instead of just 1, we see that prices are up 2.1%, while costs are up just 0.8%. Inflation trends generally have favored instruments makers and have yielded them above-average margins.

Factory managers who are concerned about rising prices had better watch those industries that are under the most margin pressure. Manufacturers of fluid meters and counting devices (SIC 3824) and makers of electricity-measuring instruments (SIC 3825) are two to watch. Exceptionally strong growth in the end-markets that buy electricity-measuring instruments means buyers of integrating meters, oscilloscopes, and other equipment might be at risk for sharply higher prices in the months ahead.





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