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Machine Tool Orders Drop for Fourth Straight Month

Sept. 15, 2022
Falling automotive production is one factor dragging demand for new manufacturing technology, though reshoring signals may drive a resurgence in capital investment.

Machine shops and other manufacturers’ new orders for capital equipment slipped to $391.92 million during July, -6.1% from June, and -14.3% from July 2021, though new orders continue to be strong on an annual basis. The July totals represent the fourth consecutive monthly decline in machine unit totals and in overall order values, and the lowest monthly total in each of those categories for the current calendar year.

Through seven months of activity, and with nearly 14,700 machine tools ordered, U.S. manufacturing technology orders total $3.22 billion, which is 8.7% higher than 2021’s January-July order total.

Data for new machine-tool orders is supplied by the Assn. for Manufacturing Technology’s monthly U.S. Manufacturing Technology Orders report, a recap of nationwide and regional data for sales of metal-cutting and metal-forming and -fabricating machinery. The USMTO report serves as a forward-looking indicator of overall manufacturing activity, as machine shops and other manufacturers make capital investments in preparation for demand expected in the weeks and months ahead.

“While July 2022 is down compared to July 2021, orders in both years were quite above what would be seen in a typical year,” AMT president Douglas K. Woods said. “Last year was the best on record and was particularly fueled by strong orders in the last third of the year, so it will be hard to match.”

Underlying the July drop in orders was a decrease in demand from motor-vehicle producers, and orders linked to manufacturers supplying railroad, shipbuilding, and other transport sectors also decreased.

A highlight for July new orders were those linked to aerospace and space/defense sectors, which AMT noted nearly doubled from June.

AMT noted that manufacturing technology orders have seen notable increases thanks to foreign direct investment – which is one aspect of the “reshoring” phenomenon – and particularly for projects announced to manufacture microchips and lithium-ion batteries.

“Not only has foreign direct investment in the United States benefited manufacturing in recent months, but the trend of reshoring has also greatly increased the need for additional capacity,” AMT president Douglas K. Woods observed. “Metal valve manufacturers, whom we have highlighted in previous months, continue to place orders for machinery at levels that would be unheard of just a few years ago.

Wood added that manufacturers’ determination to establish “more resilient supply chains” will continue to prompt more domestic manufacturing developments.

“That demand has pushed manufacturing capacity utilization to an over two-decade high,” Woods reported. “If these trends continue, it could create a sustained need for additional manufacturing technologies – and particularly automation, should manufacturers continue to grapple with a shortage of labor.”

The regional totals for metal-cutting machinery orders show a monthly increase only in the Northeast. Manufacturers in that region booked $67.4 million worth of new metal-cutting machine orders, still -16.3% less than the July 2021 figure. It brings the regional year-to-date order total to $498.6 million, virtually even (-0.7%) compared to the Jan.-July 2021 total.

The decline in July metal-cutting machine orders was most significant in the North Central West region, where the $70.32  million total represents a -21.8% drop from June and a -39.4% drop from July 2021. That region’s YTD metal-cutting machine orders total is now $583.26 million, just -2.5% less than the Jan.-June 2021 result.

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