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Cutting Tool Demand Shows Manufacturing Remains Weak

Dec. 18, 2019
U.S. manufacturers' consumption increased 10.2% in October from September, but the year-over-year decline in the CTMR continued for a sixth straight month

Weak U.S. manufacturing demand continued to be reflected in machine shops' and other manufacturers cutting-tool consumption during October. The $216.1 million total for U.S. cutting-tool consumption during October 2019 actually rose 10.2% over the revised September total, but fell -3.3% below the October 2018 result. The January-March 2019 cumulative total for U.S. cutting-tool consumption is now $2.1 billion, meaning that 2019 year-to-date is nearly even (-0.1%) with the 2018 figure.

The data is supplied by AMT – the Assn. for Manufacturing Technology and U.S. Cutting Tool Institute, which together compile the Cutting Tool Market Report. CTMR presents cutting tool consumption as a leading indicator of both U.S. manufacturing activity, as it is a true measure of actual production levels.

“The modest decline in the cutting-tool market that was forecast by IHS and others seems to have come to fruition," commented USCTI president Bret Tayne. "However, it is heartening to see that October improved over the prior month. We are also seeing improvement in some other recent indicators, such as the recent manufacturing employment increase in November and some of the Federal Reserve Bank Regional Updates, as well as some anecdotal evidence of a stronger finish to 2019.”

The CTMR sponsors cited IHS to note that the September-to-October improvement is a largely seasonal effect, and that the October result represented the sixth consecutive month with a year-over-year decline in cutting-tool consumption, "bringing 2019 below 2018 on a cumulative year-to-date basis," according to Scott Hazelton, managing director of Economics & Country Risk at IHS Markit.

Hazelton further noted that this decline is consistent with the Institute for Supply Management's Purchasing Managers Index (PMI) results, which indicate general weakness in manufacturing, as well as declining car sales and the slow-down of Boeing's 737 MAX program.

"Automotive and aerospace are the two largest demanders of cutting tool products," Hazelton added. "It is encouraging that October’s decline was the smallest of the past three months, and may indicate that a trough is nearing.

"Trade frictions appear to be easing," he continued, "and Boeing is expected to increase production in the first quarter of 2020. It is premature to expect a resumption of growth, but 2020 looks to offer some improvement.”

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