Industry Market Trends
Machine Tech Orders Drop Sharply in January
March 22, 2012
Manufacturers sharply reduced orders for machinery and related equipment in January after a tax credit expired, yet the year-over-year value of orders remained significantly higher. United States manufacturers and machine shops ordered $401.69 million worth of machine tools and related technology in January, down 26.5 percent from the previous month, according to the latest U.S. Manufacturing Technology Orders (USMTO) report. Despite the month-over-month decline, the total value of orders for January marks an 8.4 percent increase over the $370.46 million total reported in the same month last year. "January's increase in manufacturing technology orders over 2011 is great in light of lower forecasts by experts," Douglas K. Woods, president of the Association for Manufacturing Technology (AMT), said in a statement. In the last quarter of 2011, AMT and other trade associations had forecast a decline in equipment orders "following a prolonged rebound in demand from the 2009 recession," American Machinist notes. In December, Woods said he expected the start of 2012 to be "a little slow as tax incentives pulled some orders back into 2011, which will likely make 2012 growth softer." Nevertheless, Woods believes the continued year-over-year growth "highlights manufacturers' increasing confidence in future growth and that their bottom lines are being channeled into investments in advanced manufacturing technologies." Based on data from member companies of AMT and the American Machine Tool Distributors' Association (AMTDA) - which merged earlier this month - the USMTO report provides national and regional consumption totals for manufacturing technology and related equipment. On a month-over-month basis, machine tool and related equipment orders declined in all but one of the five major U.S. regions tracked by the USMTO. The sole increase from December to January was in the Central region, where manufacturing technology orders totaled $128.30 million, 11.6 percent higher than in December and 16.1 percent higher than the January 2012 total. The largest month-over-month drop was in the South, where January machine tech orders were down 62.1 percent from December 2011. Moreover, at $35.57 million, the January 2012 total was also down 33.6 percent from the same month last year. In the Northeast region, orders totaled $56.01 million in January, marking a 43.2 percent drop from December but a 12.5 percent increase over the January 2011 total. Manufacturing technology orders in the Midwest region totaled $141.71 million in the latest month, 23.8 percent lower than in December but 24.9 percent higher than in the first month of 2011. In the Western states, January orders totaled $40.1 million, down 24.1 percent from December and 7 percent from the January 2011 figure. According to the latest data from the U.S. Department of Commerce this month, total new orders for machinery - including industrial, construction and material-handling equipment - dropped 10.5 percent to $30.5 billion in January, as industrial equipment plummeted 17.7 percent to $2.7 billion for the month. Meanwhile, shipments of machinery dropped 5.9 percent to $29.8 billion during the same period, with industrial equipment falling 5.1 percent from December to $3 billion in January, the Commerce Department data indicate.