U.S. machine shops and other manufacturers ordered $219.4 million worth of new machine tools during May 2020, -5.3% less than April's $225.8 million – a figure which was described then as the lowest single-month total for the U.S. Manufacturing Technology Orders report since May 2010. The new decade-low stands -44.5% less the May 2019 total, $368.63 million, and brings the 2020 cumulative total for machine-tool orders to $1.29 billion, a -30.1% year-to-date decline versus 2019.
Machine-tool orders have been in decline for much of the past year due to weakening industrial demand, according to AMT – the Assn. for Manufacturing Technology, which maintains the monthly U.S. Manufacturing Technology Orders report. However, the sharp decline in year-over-year order volume has a more immediate cause.
“We had predicted that growth in the manufacturing technology sector would be flat in the first half of 2020," according to AMT president Douglas K. Wood. "However, it is down about 30% due to the impact of the pandemic on the global manufacturing industry,” said Douglas K. Woods, AMT president.
The USMTO report tracks orders for metal-cutting and metal-forming and -fabricating equipment, nationwide and in six geographic sectors. It is based on information supplied by participating producers and distributors of that equipment, and represents a leading indicator of manufacturing activity as investors prepare their operations for customers' future work orders.
“While the aerospace, defense, housing, and infrastructure sectors did better in May, growth has been uneven across industries. The automobile sector is down, and spending on medical supplies has leveled off," Woods continued. "Significantly, very high business and consumer savings rates indicate a lack of confidence in the economy, and industry economic forecasters predict the manufacturing industry will be down about 50% before it begins to rebound in the last quarter of this year or in early 2021.
The poor nationwide demand for May was not evident in the regional reporting: while the Northeast region showed total new orders fell -46.5% from April to May, the Southeast region had a 5.2% increase for the same period. The North Central-East region had a 45.5% April-to-May rise in new orders for metal-cutting equipment, but the North Central-West region showed a -5.6% decline in new orders during that time.
AMT also found some encouraging results in the May data. “Employment figures are the positive news," Woods said. "Layoffs in the manufacturing sector have gone down to their pre-pandemic levels, and there have been two consecutive months of national gains in employment.
"These gains likely trickle down into the economy in the form of increased income, greater consumer confidence, and increased spending, and lead to a return to more normal spending cycles,” he projected.
