Economic data appear to be trending up for U.S. machine shops and equipment OEMs. According to cutting tool sales figures from June, consumption of the consumables increased by $181 million, the strongest monthly showing this year. This figure represents a 7.3 percent jump from May and a 9.9 percent rise from June 2013.
Cutting tools are regarded as primary consumables in U.S. manufacturing. Their sales are, consequently, an important way of gauging the health and outlook of the machining industry. Shops don't always need new machinery to increase business, the reasoning goes, but they always need cutting tools.
The cutting tool sales figures, which were released on Aug. 13, are compiled for the Cutting Tool Market Report, a joint effort of the U.S. Cutting Tool Institute (USCTI) and the Association for Manufacturing Technology (AMT). The figures, which are based on data submitted monthly by companies participating in the tracking program, reportedly represent 80 percent of U.S. cutting tool sales.
AMT, of course, is the organizer of the biennial International Manufacturing Technology Show (IMTS) in Chicago, which this year runs Sept. 8-13 at McCormick Place. Based on these and other relevant manufacturing data posted by ThomasNet News this week, this year's IMTS could yield solid results in equipment sales as business confidence gains.
"June represents the strongest sales numbers in 2014, which projects optimism for the remainder of the year," affirms USCTI President Tom Haag in a statement announcing the results.
June was, in fact, the fourth month of growth in cutting tool sales this year. Only February and May failed to post gains over their previous months.
Haag believes that the June results put the cutting tool industry on track to surpass last year's total sales of $2.03 billion. And it very well could, providing that the sales pace continues, which seems reasonable considering that major trade shows such as IMTS often boost business in the years they are held.
Nevertheless, in looking at figures from the first half of 2014, cutting tool sales are on track to only match last year's results. It is thus going to take good third- and fourth-quarter figures - as well as a strong IMTS - to exceed the 2013 total.
Consider this: Sales in the first six months of 2014 as reported in the Cutting Tool Market Report amounted to $1.011 billion. This breaks down to January sales of $158 million, which were 14.5 percent higher than December 2013; February, $157 million, 1.2 percent less than January; March, $171 million, 7.8 percent over February; April, $175 million, 2.1 percent higher than March; May, $169 million, 3.5 percent less than March; and June, of course, at $181 million, a 7.3 percent gain, as noted, over May.
A simple doubling of the first-half figure yields an annualized result of $2.022 billion, roughly even with 2013 (assuming $8 million can be accepted as a rounding error).
Moreover, although the June sales total is indeed strong and cause for optimism for the rest of the year, the fact is that the USCTI/AMT monthly sales numbers for the first half are down -- in some cases significantly -- from their respective totals in 2013, when the economy, according to an earlier statement by Haag, was "struggling."
For example: January sales were down 10.6 percent from the same month in 2013; February posted a 6.8 percent decline year over year; and March was off 2.5 percent from the same time a year ago. April showed 3.3 percent fewer sales than in 2013, and May was down 4.4 percent from the previous year. Only in June did sales in 2014 exceed those for the same month in 2013.
So will 2014 truly be better than 2013? Some indication will come with the sales figures for August and September, and later, the post-IMTS demand that will doubtlessly influence business in October and November.
A good second half would put cutting tool sales on track to outpace the results of 2013. This, in turn, would be a reliable indication that U.S. machining, in particular, and manufacturing, in general, are doing well. The October and November numbers will thus show the strength of business in 2014 and provide a good indication of health in 2015.