Andrey Armyagov | Dreamstime
CNC milling machine.

Machine Tool Orders Reverse Downward Trend

Oct. 10, 2022
Manufacturers booked $460.7 million worth of manufacturing technology equipment in the latest report, the highest total since Q1 – but long lead-times and a potential economic slowdown threaten sustained order activity in the months ahead.

U.S. machine shops and other manufacturers halted a four-month slide in new orders during August, booking a total of $460.7 million worth of CNC machinery, 16.3% more than the July total. The new total is -14.5% less than the August 2021 figure however, and brings the year-to-date total for machine tool new orders to $3.69 billion, 5.3% higher than last year’s January-August order value.

AMT – the Assn. for Manufacturing Technology tracks machine tool orders in its monthly U.S. Manufacturing Technology Orders report, recapping 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.

Machine tool orders ended 2021 with strong totals, but started 2022 with less impressive results. The current year’s monthly orders peaked in March at $551.8 million, and then fell in each successive month until August.

“This is the first increase since March 2022 and the highest order level since April,” observed AMT’s chief knowledge officer Pat McGibbon. “As we pointed out in the last release, July and August are typically slower, particularly in the months prior to IMTS in Chicago, the largest manufacturing technology show in the Americas. This increase in order activity was unexpected. While orders are returning to the typical seasonal patterns we expect, they are doing so at a very elevated level.”

The September USMTO report is expected to include strong order volume recorded during IMTS 2022, held September 12-17.

“Given the success of 2021, I would have expected it to take IMTS to bring the year-over-year numbers back to positive, but finishing August over 5% above last year really bodes well for a stronger-than-expected end to the year,” McGibbon added.

The August regional results for metal-cutting machine orders were positive in all cases, but strongest in the North Central-West (up 54.0% from July), West (+25.9) and South Central (+20.6%). Only the South Central (+15.0%) and North Central-East (+2.5%) regions year-over-year improvements, and each of the other four regions showed double-digit decreases in order value from August 2021.

YTD order volumes for metal-cutting machines were strongest in the South Central (+32.6%) and Southeast (+22.9%) regions, and decreased in the Northeast (-3.1%) and North Central-West (-6.7%).

“Despite the positive signs, the last quarter of the year will present a challenge for the industry,” McGibbon said. “Easing of supply-chain pressures is not happening symmetrically. Inventories of durable goods components have been increasing steadily since September 2020, while certain supply bottlenecks are holding up the delivery of machines already ordered.

“We haven’t begun to see any significant increase in cancellations, but long lead-times coupled with a potential economic slowdown could pose a threat to sustained order activity in the last quarter of 2022 and into the first half of 2023," he concluded.

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