Even substantial growth in manufacturing technology investment by construction equipment manufacturers was not enough to buoy annual orders in 2023, which remain nearly 15% below the 2022 level despite a more than 8% increase in order volume in May 2023.
According to the latest U.S. Manufacturing Technology Orders (USMTO) Report published by AMT – The Association for Manufacturing Technology, new orders of manufacturing technology totaled $365.9 million in May 2023, an 8.6% increase compared to the prior month but short of May 2022 orders by 16.7%. Annual orders for 2023 increased to $2.1 billion but remain nearly 15% behind orders for the same period in 2022.
AMT, the association representing U.S.-based providers of manufacturing technology, compiles the USMTO based on the totals of actual data reported by companies participating in the USMTO program. The report provides regional and national U.S. orders data of domestic and imported machine tools and related equipment and serves as a leading economic indicator as manufacturing industries invest in capital metalworking equipment to increase capacity and improve productivity.
Commenting on the May 2023 figures, Douglas K. Woods, president of AMT, said May orders grew but not enough to make up for the record decline in April, with many large consumers of manufacturing technology decreasing orders for the second month in a row. However, he added that typically smaller consumers of manufacturing technology saw significant growth, which he said “highlights some interesting changes in how and where goods are manufactured, particularly in anticipation of government spending programs.”
For example, AMT noted that orders from electrical equipment manufacturers are at the highest monthly level of 2023 and are on pace to hit their second largest investment level since 2018. Further investment may be spurred by the Grid Resilience and Innovation Partnership (GRIP) program, part of the 2021 Bipartisan Infrastructure Act, which is expected to send notification of approved projects by the summer of 2023, AMT added.
Construction equipment manufacturers are another area of growth, having doubled their order volume in May 2023 vs. the previous month, and putting them on pace for the highest order volume since 2012, AMT reported. The expansion correlates to a dramatic uptick in new housing starts in May and the upward trend in new permits since the start of 2023. Construction spending on new manufacturing facilities has also doubled since the end of 2021, AMT noted.
Even with the positive growth in specific industry segments and the upward revision to Q1 GDP reported two weeks ago, the overall data indicates that the manufacturing technology industry is showing signs of a slowdown, Woods said. On a year-to-date basis, total U.S. manufacturing technology orders are down 14.6%, led by a substantial decline in metal forming & fabricating (-27.9%), but with metal cutting also dipping 14.4%. On a regional basis, the Western part of the country saw the great shortfall at -36.8%, followed by the Southeast at -26.7%. Only the South Central region reported a slight uptick of 2.1%.
“In his June 14 press conference, Federal Reserve Chair Jerome Powell mentioned that manufacturers of durable goods – the consumers of manufacturing technology – would likely feel the effects of elevated interest rates before the broader economy. Our experience in 2016 shows that it is possible for there to be a downturn in the manufacturing technology industry while avoiding a broader recession,” Woods said. “Only time and more data will tell if we are in an economic situation more like 2016 than the situation in 2001, as many economists have predicted.”
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