U.S. machine shops and other manufacturers booked new orders totaling $376.1 million for new machine tools during October, the latest statistical evidence to indicate that manufacturing demand is flat, at best, as 2019 closes. In fact, the October data supplied by AMT – the Association for Manufacturing Technology in its monthly U.S. Manufacturing Technology Orders (USMTO) report revealed a slight (+2.1%) increase in capital-equipment demand from September, to $376.1 million, but that total is -20.6% lower than the October 2018 USMTO total.
Through 10 months of 2019, USMTO records new orders totaling $3.74 billion, a -18.4% year-to-date decline from the January-October 2018 period.
AMT offers the USMTO reports as a leading indicator of manufacturing of industrial demand as machine shops and other manufacturers invest to complete planned or anticipated production programs. AMT reports nationwide and regional data for orders of metal cutting and metal forming and fabricating equipment, based on data supplied by participating producers and distributors of that equipment.
“Since March, job shops have accounted for an unusually large share of orders, reflecting the fact that large players deflected capital-spending decisions to their sub-tier supply chain,” commented AMT president Douglas K. Woods. "That trend began a reversal in October, however, as companies of all sizes placed orders."
According to the report's regional data summary, all the October order increases were to be found in the North Central-East (+31.0% from September) and North Central-West (+7.6%) regions, though in both regions the YTD total trails the 10-month records for 2018, -14.8% and -32.6%, respectively.
AMT identified "robust growth" in the industrial machinery manufacturing sector during in October 2019, and that automotive-sector machine-tool demand increased orders by about 40%, while the aerospace-sector demand fell by slightly over 10%.
"Our research and the data point to a shifting of capital-investment activity from small companies downstream to Tier 2 and 1 suppliers," Woods continued. "Based on quotations activity, orders in November and December are likely to be from larger companies expiring their capital spending budgets rather than small manufacturers continuing to invest at their second and third quarter rates.”
Woods reaffirmed the AMT's past message that uncertainty in U.S. manufacturing is based on "trade issues … dampening U.S. manufacturers’ enthusiasm for investing in new capital equipment."
He countered that idea with the insight that Federal Tax Reform continues to encourage manufacturers to invest in new manufacturing capacity, and that those incentives would have more positive effects in late 2020 and into 2021.