Machine Tool Orders Slow Down
Orders in July were $319.7 million, off 19 percent from June orders of $397 million.
Posted: September 11, 2017
U.S. Manufacturing Technology Orders (USMTO) for July were $319.7 million, off 19 percent from June orders of $397 million, according to AMT – The Association For Manufacturing Technology (McLean, VA). Though orders posted in July are typically down 15 percent from the previous month, this year several large projects converted mature quotations into major orders with bundled add-ons, such as special tooling and automation.
The contract machine shop sector, where companies typically buy one or two machines at a time, was one of the stronger markets in July, representing 41 percent of all the units ordered in July and 32 percent of the total July dollar value. The big surprise was a jump in defense orders from less than one percent of total orders to four percent in July – more than a ten-fold increase. Medical equipment and agricultural equipment sectors were up 10 percent and seven percent respectively.
“Our members noted the marked difference in the start of this summer season,” said Pat McGibbon, the vice president of strategic analytics at AMT – The Association For Manufacturing Technology. “Usually quotations and leads start to slow in the summer, but that has not been the case in 2017.”
The Southeast region registered one the largest month-to-month declines in the past three years, falling 34 percent relative to June and down 10 percent relative to July 2016. Almost the entire decline can be attributed to a dramatic drop in aerospace activity in the region. The Northeast region posted the only regional increase over June figures of the six USMTO regions. USMTO tracks well with the Purchasing Managers’ Index (PMI) that is produced by the Institute of Supply Management. Any mark over 50 represents an indication of expansion. The index is 56.3 in July up from the June level.
Business’ profitability over the past three quarters primes the pump for expansion on corporate investment in new durable goods and production equipment. AMT has recently replaced one of its key indicators with the Gardner Business Index (GBI), which has tracked well with USMTO in the past and turned upwards markedly in December 2016 about 90 days before the recognizable upturn in USMTO.
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