Although manufacturers in most U.S. regions cut back on orders for machine tools and equipment in January, the overall value of manufacturing tech consumption remained significantly higher than in the same month last year.

The total value of United States manufacturers’ machine tool and related equipment consumption dropped to $371.41 million in January, down 16.3 percent from December, according to the latest U.S. Manufacturing Technology Consumption (USMTC) report, released this week. Despite the decline, the monthly consumption total was 188.3 percent higher than the $128.82 million reported for January 2010.

Based on data from member companies of the American Machine Tool Distributors’ Association (AMTDA) and the Association for Manufacturing Technology, the USMTC report provides national and regional consumption totals for manufacturing technology and related equipment.

On a month-to-month basis, consumption dropped in four of the five major regions of the U.S. tracked by the USMTC in January.

On a regional level, the largest decreases occurred in the Northeast, as January machine tech consumption fell to $49.21 million, a 25.6 percent drop from December’s total of $66.13 million. However, the January consumption figures remained 92.4 percent above the total for the same month last year.

In the Midwest, manufacturing technology consumption decreased to $124.07 million in January, 24.5 percent lower than the December total of $164.32 million. Despite the month-to-month loss, consumption surged 224.6 percent above the January 2010 level.

Manufacturing tech consumption in the Western region totaled $44.58 million in January, down 16.4 percent from December’s $53.30 million, but 284.1 percent higher than the total for the same month last year.

In the Central region, machine tool consumption was valued at $99.66 million in January, 13.1 percent below the December total of $114.68 million, but 283.3 percent more than the consumption total reported in January 2010.

Unlike the other four regions, manufacturing tech consumption in the Southern states grew in January, rising to $53.90 million, an 18.7 percent increase from December’s $45.42 million total. January consumption was also up 96.5 percent when compared with the same month last year.

“Despite the slight decline in orders from December, the January USMTC report confirms that U.S. manufacturers are reinvesting vigorously to improve productivity,” AMTDA President Peter Borden said in an announcement of the results. “As equipment deliveries grow longer and commodity prices increase, factories may continue to make these investments before inflation and other factors raise prices further.”

According to the latest data from the U.S. Department of Commerce, the value of new orders for machinery fell from $31.8 billion in December to $27.8 billion in January, a 12.6 percent drop, led by steep declines in power transmission equipment and industrial machinery. However, new orders for machinery remained 28.3 percent above their prior-year level.

Machinery shipments experienced a more modest decline in January, falling from $27.3 billion in December to $25.5 billion in January, a 6.4 percent drop. January machinery shipments remained 14.7 percent above the total for the same period last year.

Although there have been monthly declines in machinery consumption and orders, machine sales are expected to be strong in 2011. In the Institute for Supply Management’s latest manufacturing Report on Business, released earlier this month, the machinery industry was among the 14 manufacturing industries that reported growth in February.

“Business equipment spending is the bright spot in the economic outlook now and in the future,” Daniel Meckstroth, chief economist for the Manufacturers Alliance/MAPI, wrote late last month. “With 100 percent depreciation of business equipment, strong corporate profits, excessive cash flow, rising capacity utilization rates and moderate GDP growth, there is every reason to expect robust capital spending and business equipment production growth this year.”

Earlier

Machine Tech Consumption up in 2010

Manufacturing Grows at Fastest Pace in Almost 7 Years

Resources

January Manufacturing Technology Consumption 188% Higher than in January 2010
American Machine Tool Distributors’ Association, March 14, 2011

Full Report on Manufacturers’ Shipments, Inventories and Orders – January 2011
U.S. Department of Commerce, March 4, 2011

…Business Equipment Spending ‘Bright Spot’ in Economic Outlook
by Daniel J. Meckstroth
Manufacturers Alliance/MAPI, Feb. 24, 2011