The December 2015 U.S. Manufacturing Technology Orders report (USMTO) shows a 20.4% increase in order values compared to the prior month. However, that figure still leaves the year's total orders down 17.4%, according the Association For Manufacturing Technology (AMT).
While the month-to-month gain seemingly indicates an upturn for the manufacturing technology market, it is important to note that the average November-to-December gain since 2010 has been 22.4% - meaning that the end of 2015 came in below average.
“The fourth quarter turned out better than anticipated thanks to investment from the aerospace, automotive and consumer electronics industries, but the overall market will remain flat through the first three quarters of this year due to market forces like the strong dollar and low oil prices,” said AMT President Douglas K. Woods.
“It’s typical for December orders to rise as many companies invest their yearend profits into new equipment, and technology builders and suppliers try to reduce their inventories with discounted products," Woods said. "This uptick in orders does not change our forecast for the year.”
December saw the second-highest monthly order totals in 2015, with the most orders coming in March – a time when companies are looking to lessen their tax liability for the April filing deadline by making investments in new equipment.
Equipment purchases for some industries, especially those related to defense, were helped by Congress’ passage of a two-year budget deal that temporarily lifts the automatic spending cuts known as “sequester,” ensuring that federal defense programs remain intact through 2017. More of a surprise was a surge in orders from the consumer electronics industry, which defies the logic that most electronics manufacturing largely happens outside the United States.
The overall market for manufacturing technology is likely to remain soft into the third quarter of 2016, but industry forecasts predict that orders for the overall year will finish ahead 3% compared to 2015, with much of the activity coming in the fourth quarter. September’s IMTS – The International Manufacturing Technology is anticipated to create a boost in sales later this year.
December 2015 manufacturing technology orders valued $401.16 million, compared to $511.10 million in December 2014, a decline of 21.5%. The total manufacturing technology order value for all of 2015 was $4,187.83 million, vs. $5,072.50 million in 2014. This data is a reliable leading economic indicator as manufacturing industries invest in capital metalworking equipment to increase capacity and improve productivity.