U.S. Machine Tool Orders Reflect Manufacturing Expansion

Manufacturing technology orders for December 2016 totaled $406.72 million, up from November’s $337.24 million. The December monthly order value was the second highest for the year after September’s $503.67 million and, month over month, December orders were up 20.6 percent compared to November, according to the December 2016 U.S. Manufacturing Technology Orders Report (USMTO) from AMT – The Association For Manufacturing Technology (McLean, VA). USMTO is a reliable leading economic indicator as manufacturing companies invest in capital metalworking equipment to increase capacity and improve productivity.

Total orders for 2016 were valued at $4,013.13 million, compared to $4,178.23 million in 2015, finishing 2016 down 4.0 percent compared to 2015. As orders have pulled to near-even with levels seen before the latest dip, the general manufacturing economy is showing signs of growth. The January PMI from the Institute for Supply Management (Tempe, AZ) was 56, indicating expansion in manufacturing for the fifth consecutive month. There was also growth in capacity utilization and industrial production in December, the most recent month for which data are available.

In addition to those indicators, two other measures suggest a likely boost in capital spending for equipment and machinery: cutting tool consumption and spending from machine shops. “There has been a significant uptick in shipments for cutting tools, the primary consumable in the manufacturing process, and machine shop spending for the month was up 32 percent from November,” noted AMT president Douglas K. Woods. “Since large manufacturers will leverage their supply chain’s capital equipment before expanding their own capacity, gains for machine shop investment are promising because they typically mark an overall greater need for capacity, and a broader upturn on the horizon.”

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