Manufacturing technology orders increase in October

U.S. manufacturing technology orders totaled $376 million in October 2019 according to the U.S. Manufacturing Technology Orders (USMTO) Report. October orders increased 2% over September 2019. New orders placed in October 2019 fell 21% from October 2018, which was one of the best Octobers in USMTO history. Orders placed to date in 2019 totaled $3.75 billion, a decrease of 18.4% from the annual total through October 2018.

The industrial machinery manufacturing sector experienced robust growth in October 2019. Orders from machine shops grew at a modest pace but have not returned to their later-summer levels. The automotive sector increased orders by about 40% in October, while the aerospace sector decreased orders by slightly more than 10%.

“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,” says Douglas K. Woods, president of AMT – The Association For Manufacturing Technology. “That trend began a reversal in October, however, as companies of all sizes placed orders. Our research and the data point to a shifting of capital investment activity from small companies downstream to Tier Two and Tier One suppliers. 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.

“It’s clear that a lack of stability in the market coupled with the shifting winds on trade issues are dampening U.S. manufacturers’ enthusiasm for investing in new capital equipment. At the same time, we are nearly halfway through the Tax Reform’s five-year window of providing lower tax rates and investment incentives. The former creates instability, and while the latter should be creating an urgency to invest, our analysts and leading industry economists believe that the confluence of drivers will yield a positive impact on the market in late 2020 and throughout 2021.”