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Cutting Tool Consumption Up 8% Y/Y; Manufacturing Tech Orders Down

April 12, 2019, 07:00 AM
Filed Under: Manufacturing

U.S. cutting tool consumption totaled $205.6 million, according to the U.S. Cutting Tool Institute (USCTI) and AMT – The Association For Manufacturing Technology. This total, as reported by companies participating in the Cutting Tool Market Report collaboration, was down 4.4 percent from January’s $215.1 million and up 8 percent when compared with the $190.3 million reported for February 2018. With a year-to-date total of $420.7 million, 2019 is up 13 percent when compared with 2018.

These numbers and all data in this report are based on the totals reported by the companies participating in the CTMR program. The totals here represent a significant market share of the U.S. market for cutting tools.

“The 8 percent year over year increase posted in February reflects the continuing strength in the U.S. manufacturing base. We are hearing of signs that the market’s growth rate may slow later this year but February’s results are getting the year off to a good start,” said Phil Kurtz, President of USCTI.

According to Greg Daco, Chief US Economist at Oxford Economics, “Cutting tool shipments are off to a solid start in 2019, bucking the trend of cooler momentum in the broader durable goods category. A very solid 13 percent gain in year-to-date cutting tool shipments through February puts the category well ahead of the healthy 6 percent year-to-date rise in overall durable goods shipments. Leading manufacturing activity indicators point to healthy, but gradually cooling momentum in 2019. Slower global growth, lingering trade tensions and reduced fiscal stimulus will weigh on growth while elevated private sector confidence, a solid labor market and a more dovish Fed support activity.”

The Cutting Tool Market Report is jointly compiled by AMT and USCTI, two trade associations representing the development, production and distribution of cutting tool technology and products. It provides a monthly statement on U.S. manufacturers’ consumption of the primary consumable in the manufacturing process – the cutting tool. Analysis of cutting tool consumption is a leading indicator of both upturns and downturns in U.S. manufacturing activity, as it is a true measure of actual production levels.

February Manufacturing Technology Orders Down Y/Y

Manufacturing technology orders totaled $337.2 million in February 2019 accounting for a 15 percent decline from January and a 7 percent decline from the previous February, according to the latest USMTO report from AMT. The year-to-date total was $735.2 million, less than one percent off the year-to-date total at this point last year.
“It’s important to look at the February numbers in context. It’s true that order levels declined, but from the second strongest January in the history of the USMTO program. They’re still at good levels compared to this time a year ago,” said Douglas K. Woods, President, AMT. “Other indicators signal continued manufacturing strength. AMT members are generally positive heading into the second quarter; the U.S.-China tariff negotiations look to be moving toward a successful conclusion; and the March ISM Manufacturing PMI showed expansion which beat analysts’ expectations and rallied the stock market. However, uncertainty lingers on issues such as tax, trade and the budget, and continued inaction in Washington could stall already sluggish growth.”
While companies in many industries reduced their orders in February, the nearly 50 percent decline in orders placed by the Aerospace as well as Engine and Turbine industries led the downturn between January and February. The Automotive sector recorded a modest double-digit uptick. Bucking the general trend, February 2019 had a notable expansion in orders from Commercial and Service Industry Machinery Manufacturing such as Water Treatment and Commercial Cleaning Equipment. The big gain was the result of large orders in the Great Lakes area and the West.
Four of the six USMTO regions had fewer orders in February than January, with the largest decline coming from the Southeast. In the West, metal cutting orders rose slightly. However, declines in Forming and Fabricating lead to roughly stagnant orders compared to the previous month. The South Central region outperformed all other regions, with orders expanding by over a third from January 2019 led by growth in Oil & Gas, Contract Machining, and Food Processing Equipment sectors.
Capacity utilization had a second month of declines in February, settling at 77 percent, off the post-recession high of 77.8 percent in December 2018. Despite an increase in orders from the Automotive Sector, Light Vehicle Sales rebounded to 17.477 million annualized units in March. March Manufacturing ISM Report On Business registered a Purchasing Manager’s Index of 55.3 percent, an expansion of 1.1 percentage points over February, signaling underlying strength in the manufacturing sector.

These numbers and all data in this report are based on the totals of actual data reported by companies participating in the USMTO program. This report, compiled by AMT – The Association For Manufacturing Technology, provides regional and national U.S. orders data of domestic and imported machine tools and related equipment.

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