The first half of 2025 has been widely assessed as one of “uncertainty,” referring to manufacturers’ indecision over capital investments and slower-than-forecast industrial activity. Major OEM’s frustration with the U.S. tariff program has been widely identified as the underlying cause of the uncertainty, but global tensions and weaker consumer spending have also been cited as defining factors.
Market analyst Eli Lustgarten offered a slightly more positive view following the July data on cutting tool shipments. “Current data suggests that the worst is over for the cutting tool sector, but businesses appear to be adopting a wait-and-see attitude. The outlook seems relatively flat, with a positive bias for the second half of the year and into 2026.”
The analyst noted that manufacturers’ reliance on major end markets has been frustrated. “The auto sector faces supply chain issues related to trade as well as the expiration of the EV incentives,” according to Lustgarten. “Slower domestic economic growth and the effect of inflation on consumers indicate a slowing of auto production.”
He also explained that activity in the heavy-equipment market appears flat, “with possible positive trends in the construction sector because of reduced inventories, a slight pickup in trucks, and a possible improvement in mining.
“However, the outlook for the agricultural sector continues to deteriorate because of record yields and crops, rising carryovers, and declining prices, which have translated into a new round of layoffs,” Lustgarten explained.
A better outlook may be seen in the commercial aerospace sector, with both Airbus and Boeing continuing to add to their extensive order backlogs.
