Despite Gains Over June, US Manufacturing Technology Orders through July Off 11.7%
U.S. manufacturing technology orders totaled $383.7 million in July 2019, an increase of 7% over June 2019 but a fall of 5% from July 2018, according to the latest U.S. Manufacturing Technology Orders Report published by AMT – The Association For Manufacturing Technology. The total value of manufacturing technology ordered through July 2019 was $2.64 billion, a decrease of 12% from the 2018 year-to-date total of $2.98 billion.
“Our industry appreciated the good news that July orders out-paced June. The more interesting fact was that job shops accounted for nearly a third more of total orders than in 2018,” said Douglas K. Woods, President of the Association For Manufacturing Technology. “Clearly, other larger manufacturers are putting off capex and addressing capacity needs by outsourcing production shortfalls with job shops. We suspect the impetus is the uncertainty with the current market and future economic conditions.”
Machine shops decreased orders over the previous month for the first time since April 2019. The government and defense sector led all other industries in month-over-month gains but only accounted for a small fraction of the total orders placed. The automotive sector increased orders by more than half, and orders from aerospace increased a fifth from June 2019.
The North Central – East region led in month-over-month growth, where orders increased nearly 30%, while the region with the largest total decline was the Southeast. The West and North Central – West also saw gains over June 2019. The Northeast saw a very modest 1% decline, and the South Central narrowly avoided a double-digit decline, at 9%.
Other indicators show contraction as well. The August 2019 ISM® Manufacturing Report On Business® reported the Purchasing Managers’ Index fell 2.1%age points to 49.1. This is the first time in nearly three years the index has fallen below 50, signaling contraction in the manufacturing space. Despite increased orders coming from the automotive sector, July lightweight vehicle sales fell or the second straight month to 16.8 million units on an annualized basis. Capacity utilization fell in July to 75.9%, the lowest reading since September 2017. The University of Michigan Index of Consumer Sentiment fell to 89.8 in August, with a third of consumers making a negative mention of tariffs without prompt. The 8.6 point decrease over July 2019 is the largest monthly decline in consumer sentiment since December 2012.
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