Dmitry Kalinovsky | Dreamstime
Industrial milling cutter at work.

Cutting Tool Purchases Rise, but Suppliers are Cautious

April 20, 2023
Machine shops purchased nearly $200 million worth of cutting tools in the latest monthly summary report, but suppliers remain wary of inflation, banks, and a potential recession.
During February U.S. machine shops and other manufacturers purchased $196.9 million worth of cutting tools, a slight (+0.2%) rise from the January total, but it is 17.5% higher than the $167.6 million total consumption for February 2022. The two-month combined total consumption for 2023 is $393.4 million, or 20.1% higher than the total for January-February 2022.

The figures are drawn from the most recent Cutting Tool Market Report, a collaborative release by the U.S. Cutting Tool Institute and AMT – the Assn. for Manufacturing Technology. Data in the monthly release are based on totals reported by participating companies and represent the majority of the U.S. market for cutting tools.

USCTI president Jeff Major was guarded about the apparently positive February results. “At this point, cutting tool sales for 2023 are up over the same time period last year,” commented Jeff Major, president of USCTI. “Business concerns still exist regarding inflation, the banking industry, and a potential recession near the end of the year.”

Because cutting tools are consumable products, the purchases of which are sensitive to demand across a range of manufacturing market segments served by machining operations, cutting-tool consumption offers an index to overall manufacturing activity.

According to analyst Eli Lustgarten, cited by the CTMR sources with their February release: “Cutting tool manufacturers should remain cautious for the rest of the year. While business activity should hold, the economic data clearly points to a market peak.”

The analyst pointed to the March ISM index of manufacturing activity as an indicator of a contracting sector, with continued “softening” of new orders for manufactured products. “While we still expect cutting tool activity to finally surpass pre-COVID levels this year, producers need to remain aware of the ongoing reduction in machinery backlog and buildup of inventory,” Lustgarten stated.

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