The total value of United States manufacturers' machine tool and related equipment consumption dropped to $130.96 million in January, a 40.3 percent decline from December, according to the latest U.S. Manufacturing Technology Consumption (USMTC) report. However, the January 2010 total was 26.2 percent higher than the $103.77 million reported for January 2009, reflecting a significant year-over-year gain in machine tech consumption.

Based on data from American Machine Tool Distributors' Association (AMTDA) and Association for Manufacturing Technology (AMT) member companies, the USMTC report provides national and regional U.S. consumption figures for manufacturing machine tools and related equipment.

On a regional level, the largest decreases were in the Western states, with January machine tech consumption dropping 58.7 percent from December, to $12.06 million. Consumption in this region fell 21.8 percent below the total for the same period last year.

Manufacturing tech consumption in the Central region dropped to $27.10 million, a 50.6 percent decrease from December's $54.81 million, but 6 percent above the January 2009 total. In the Northeast, consumption fell 40.5 percent from December, reaching $25.88 million, but remained 31.4 percent above the prior-year level. Purchases in the Midwest fell to $37.41 million, a 39.9 percent decrease from December but up 31.2 percent over January 2009. Meanwhile, the Southern region saw a 3.6 percent drop from December to $28.51 million, but remained 95.8 percent above January 2009.

Although the monthly consumption rate appears to be on the decline, part of the change may be due to late-2009 incentives that encouraged consumers to make purchases earlier.

"Many customers placed orders in December to take advantage of tax relief measures, pulling orders out of January 2010," AMTDA President Peter Borden said. "The good news is that January 2010 orders are still 26 percent ahead of January 2009. Fortunately, there are measures moving through Congress that will expand these benefits, incentivizing manufacturers to invest in capital equipment in 2010."

According to a February report from the U.S. Department of Commerce, new orders for manufactured goods in January rose 3 percent over December, reaching $175.5 billion and marking the second consecutive monthly increase. In December, new orders rose by 1.9 percent over the previous month.

The report found that new orders for machinery fell from a seasonally adjusted 24,481 in December to 22,100 in January, a 9.7 percent drop. Machinery shipments decreased 6.2 percent, from 23,989 in December to 22,490 in January. Year-to-date, new machinery orders actually rose 5.5 percent over the same period in 2009, while shipments fell 9.4 percent.

Although monthly decreases indicate that manufacturing tech consumption slowed at the start of 2010, year-over-year growth suggests that the equipment industry is cautiously emerging from the economic downturn.

"Factories may be taking a pause to gauge demand after boosting production in the second half of 2009 to replenish inventories," Bloomberg News reported. "Reports earlier this week showed weaker consumer sentiment and home sales, underscoring Federal Reserve Chairman Ben S. Bernanke's view that the recovery is 'nascent'... ."

Earlier

Manufacturing Tech Sales Down in 2009

Resources

January Manufacturing Technology Consumption 26 Percent Ahead of Last January
Association for Manufacturing Technology / American Machine Tool Distributors' Association, March 8, 2010

...Durable Goods Manufacturers' Shipments, Inventories and Orders January 2010
U.S. Department of Commerce, Feb. 25, 2010

U.S. Economy: Equipment Demand Slows to Start 2010
by Bob Willis and Timothy R. Homan
Bloomberg News, Feb. 25, 2010