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U.S. Machine Tool Orders Slump

July orders of $246.4 million fell in a steep decline of almost 25 percent from the previous month.

Posted: September 30, 2016

The U.S. Manufacturing Technology Orders (USMTO) report for July 2016 shows that orders dropped 24.8 percent for the month compared to the previous month of June, according to data from AMT – The Association for Manufacturing Technology (McLean, VA). Year over year, monthly orders were down 23 percent compared to July 2015.

“The automotive and aerospace industries moved into a summer slump, piling on to manufacturing’s ongoing challenges from the effects of a strong dollar, weakness in key export markets and a soft oil and gas industry,” stated Douglas K. Woods, the president of AMT. “Manufacturers are feeling cautious about the economy and hesitant to make new investments until they get a better sense of certainty.”

The latest industry forecasts indicate that the capital manufacturing equipment market will remain in negative territory through the end of the year, with a return to positive growth not coming until the second quarter of 2017. While it is anticipated that sales from the IMTS trade show that took place in Chicago in mid-September will boost orders later in the year, sustained growth in orders is unlikely in the immediate future. The Institute of Supply Management’s PMI, a key measure of manufacturing’s health, dropped to 49.4 in August, indicating contraction.

July 2016 manufacturing technology orders were valued at $246.38 million, down from $327.67 million in June. Year to date, orders are valued at $2,090.88 million, compared to $2,497.64 million at the same point in 2015, a drop of 16.3 percent. USMTO data is a reliable leading economic indicator as manufacturing companies invest in capital metalworking equipment to increase capacity and improve productivity.