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Cutting Tool Consumption Dips for Third Straight Month

Nov. 15, 2015
Demand fell 1.9% from previous month, down 11.7% year/year Poor result anticipated “… performance shows little change” Effects strong dollar, low oil prices
Cutting tools are described as “the primary consumable in the manufacturing processs,” and the consumption trend bears some similarity to manufacturers’ durable goods shipments as an indicator of current industrial activity.

U.S. manufacturers consumed $170.8 million worth of cutting tools during September, a decline of 1.3% from August, and an 11.7% drop from the September 2014 result. The figures are drawn from the Cutting Tool Market Report (CTMR), a monthly presentation by the U.S. Cutting Tool Institute (USCTI) and AMT – the Association for Manufacturing Technology, which track consumption of cutting tools as a reliable indicator of manufacturing activity in the U.S.

This September’s results had been expected to compare poorly with the year-ago figure, which incorporated sales of cutting tools recorded during IMTS 2014.

The data in the CTMR is based on actual totals reported by participating companies, who represent the majority of the U.S. market for cutting tools.

The report’s sponsors maintain that cutting tools are “the primary consumable in the manufacturing process,” and that cutting tool consumption “is a true measure of actual production levels.” Unlike the U.S. Manufacturing Technology Orders report, also presented monthly by AMT,  — which measures new orders for machine tools as an indicator of businesses’ confidence in the sector — the CTMR is an index of current business activity.

September’s result marks the third consecutive monthly decline for cutting tools, amid a manufacturing sector that has lacked vigor for most of the past two years.  However, the recently issued USMTO report for September showed an increase in orders, suggesting some degree of confidence by machine shops and other manufacturers in future market conditions.

"The month to month performance shows little change and certainly no significant recovery from the effects of the strong dollar and low oil prices, therefore the current industry conditions will continue," stated Brad Lawton, chairman of AMT’s Cutting Tool Product Group.

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