Machine Tool Orders Remain Sluggish

The latest U.S. Manufacturing Technology Orders (USMTO) report showed that orders for
manufacturing technology in October 2015 were down 0.3 percent from September and year-to-date were down 17.4 percent compared to the same point in 2014, according to AMT – The Association For Manufacturing Technology (AMT; McLean, VA). “While the general economy continues to grow at a moderate pace, the manufacturing sector is struggling with the effects of a strong dollar, reduced commodity prices, especially oil, and struggles in key export markets like China,” said Douglas K. Woods, the president of AMT. “As the broader industry faces this slowdown, manufacturers are not making significant capital investment in new manufacturing technology.”

The U.S. GDP is forecast to grow 2.4 percent in 2015, but that growth is being fueled mostly by consumer spending. Economic data around manufacturing isn’t as positive. The latest PMI from the Institute for Supply Management stood at 48.6, with a reading below 50 indicating contraction. Additionally, the number of net manufacturing jobs dropped by 1,000 while the larger economy added 211,000 jobs. The ISM report and other indicators also show that manufacturers are working to reduce their U.S. Manufacturing Technology Orders, a statistical program of AMT excess inventory that means companies are concerned with the prospects for short-term future growth.

“Market flatness can be expected to remain into 2016, and signs pointing to short-term interest rate hikes from the Federal Reserve could potentially hamper the consumer spending that is currently driving economic growth,” added Woods. “Manufacturing is the real driver of sustainable economic growth, and tax provisions, such as bonus depreciation and Sec. 179 expensing, encourage the investment in plants and equipment necessary for manufacturing strength and competitiveness. Factories don’t have a great deal of excess capacity, meaning any uptick in activity could help the manufacturing economy bounce back.”

October U.S. manufacturing technology orders totaled $327.39 million, down 28.3 percent compared to $456.44 million in October 2014. Year-to-date total orders for 2015 stand at $3,452.82 million, compared to $4,178.71 million at the same point in 2014. This data is a reliable leading economic indicator as manufacturing industries invest in capital metalworking equipment to increase capacity and improve productivity.

These numbers and all data in this report are based on the totals of actual data reported by companies participating in the USMTO program. This report, compiled by AMT, which provides regional and national U.S. orders data of domestic and imported machine tools and related equipment. Analysis of manufacturing technology orders provides a reliable leading economic indicator as manufacturing industries invest in capital metalworking
equipment to increase capacity and improve productivity.

www.amtonline.org