Manufacturing technology orders dropped in December, but outlook positive for 2016

The "U.S. Manufacturing Technology Orders" report (USMTO) for January 2016 showed that order values were down 30 percent from December, according to AMT – The Association For Manufacturing Technology. Year-over-year orders declined 21 percent.

“The drop in orders was not unexpected,” explained Douglas K. Woods, president, AMT. “January numbers are typically lower than December as companies that have financial years synced with the calendar year place delayed orders based on where they are relative to budget goals.

“This cycle will be less dramatic in 2017,” Woods added. “The temporary tax incentives which have spurred year-end buying decisions for more than a decade are now permanent or extended for several years.”

The automobile, aerospace, and medical sectors are currently driving orders, while the off-road construction, oil and gas, and agriculture sectors continue to struggle. As a result, the Southeast region is particularly strong when compared to other regions of the country because of the significant presence of auto, aerospace, and medical companies in this region.

Although orders were down, January average unit values hit their highest level since January 2015, suggesting manufacturers are buying more sophisticated manufacturing technology to ramp up productivity rather than expand operations, which would show a broader increase in orders and lower unit values.

Forecasts from The MFG Meeting, the joint annual meeting of members of AMT and the National Tooling and Machining Association, suggest that the U.S. economy is poised for growth along the lines of 2.5 to 3.5 percent, driven by consumer demand. Analysts speaking at the conference also expect China’s economy to rebound sooner than expected and oil prices to reach $45 a barrel by the end of 2016.

AMT expects the overall market for manufacturing technology to remain weak well into the spring and summer months. Activity should slowly begin to turn around this fall.

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, provides regional and national U.S. orders data of domestic and imported machine tools and related equipment.

The full report can be found here.