Machine Tool Orders as an Indicator of Industry Health

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In the US, few industries are tracked and monitored as closely as the manufacturing sector, and the metrics used to follow manufacturing trends are broad and varied. Key indicators measuring raw material orders, shipping and distribution statistics, and new facility construction are all closely watched by industry experts. One of these metrics—the machine tool order rate– is especially crucial. Machine tools help manufacturing firms engineering important components of industrial products, and when machine tools orders are high, this means manufacturing firms are thriving, expanding their operations, and processing larger orders at a faster rate.

Every year, the number of machine tool orders in the US is tracked and examined by the United States Manufacturing Technology Orders Report (USMTO), a publication of the Association of Manufacturing Technology (AMT). The AMT reviews new order numbers and other manufacturing technology data gathered from participating manufacturing and distribution firms. On a monthly basis, the results of this data analysis are shared with decision makers in the industry. Because new technology investments can be costly, a spike in these investments usually correlates with high business confidence among manufacturing executives. Higher numbers in the USMTO indicate growth in the sector and suggest a positive forecast in the near and long term future.

In 2014, manufacturing technology orders experienced a general rise, and the year ended on a high note that suggested robust growth and steady recovery from the recent downturn. So far, 2015 numbers have not been as strong, and as of February, the index experienced a 9.8 percent year-to-date drop. Manufacturers and machine shops ordered about 307 million dollars’ worth of metal forming and fabricating equipment during that month, which represents a 10.6 percent drop from January and a 14.6 percent decline since February of the previous year.

What this means for manufacturing firms remains to be seen, but according to the president of the AMT, the position of the industry is still strong, and the pressures that have led to the decline are expected and anticipated. These pressures include a stronger dollar and lower capital outlay from the energy industry.

For more information on the USMTO and the state of the manufacturing sector in the US, reach out to the industry experts at Career Staffing Services.

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