U.S. Cutting Tool Consumption Rises in August

U.S. Cutting Tool Consumption Rises in August

“Bounce back” is good news, but doubts remain over the strength of the overall economy +19.2% month/month +4.3% year/year -8.3% year-to-date

Similar in performance to manufacturers’ durable goods shipments, cutting tool consumption is seen as a reliable indicator of actual production levels.

Purchases of cutting tools by U.S. machine shops and other manufacturers rose to $175.21 million during August, up 19.2% from the July figure ($146.95 million) and up 4.3% compared to the August 2015 result ($167.91 million.) The figures are drawn from the latest release of the Cutting Tool Market Report, a monthly update to purchases of cutting tools presented by the U.S. Cutting Tool Institute and AMT – the Assn. for Manufacturing Technology.

The figures in the report are based on totals reported by companies participating in the CTMR program, and represent the majority of the U.S. market for cutting tools.

The report’s sponsors note that cutting tools are the primary consumable product for manufacturing, making cutting tool consumption a reliable leading indicator of activity in that segment of the industrial economy.

For the first eight months of 2016, cutting tool consumption totaled $1.352 billion, which signifies a decline of 8.3% compared to January-August 2015.

“The Cutting Tool Industry welcomed a 19.2% bounce back from a very weak July,” commented Steve Stokey, USCTI president. “Although this is good news, questions still loom over the strength of the overall economy moving forward.”

Stokey cited strong attendance and a new record for exhibitors at September’s International Machine Tool Show 2016 as “a sign that the industry is optimistic that there are better times ahead.”

August also delivered positive results for new orders of machine tools, as reported by AMT in it’s latest U.S. Machine Tool Orders report — though that data is considered an index to future activity in manufacturing.

The release of the August CTMR data included commentary by Scott Hazelton, an analyst for IHS Markit: “Revenues will improve for the U.S. cutting tool industry in 2017, with growth approaching double digits for the year as a whole,” he noted. “The remainder of 2016 will continue to be challenging with headwinds from weak oil prices, an inventory cycle, and the high dollar.”

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