U.S. manufacturing technology orders in May posted double-digit growth rates month over month and year over year, demonstrating strong, sustained growth in the sector, according to the U.S. Manufacturing Technology Orders report from AMT – The Association for Manufacturing Technology.
Overall, orders totaled $485 million in May, bringing the year-to-date totals to $2.1 billion or 26 percent higher than the first five months of 2017.
“The May rebound was largely expected as April tends to be a slow month, but the 26 percent jump over 2017 shows the strength in the global markets for manufacturing technology products and places the trend line on orders above our projections from last year,” said Doug Woods, AMT President. “The market does have some turbulence with tariff concerns, supply chain challenges, labor shortages, interest rates creeping up, and disruptive technologies shifting markets and methods. Still, for those agile and innovative companies, these market dynamics create a larger volume of opportunities, and pave a pathway to continued growth.”
In May, every region saw an increase in orders, with the South central showing gains that point to a rebound in the region for manufacturing technology expenditures. It is important to note that while oil and gas exploration is a significant portion of the recovery, there is a diversity in this growth that the region has not seen in decades. The North central-west posted the largest year-to-date gains at 40.3 percent, fueled by increased activity in the off-road equipment, medical equipment and job shop industries.
Large investment programs announced by the auto industry 18 to 24 months ago are finally beginning to bear fruit with May orders. An overwhelming majority of the new orders will be going to the “New Detroit” (Tennessee, Alabama, Georgia and the Carolinas). A sector to watch is the engine and turbine industry. Power generation is seeking a rapid increase in capacity. The West and Southeast are the two areas that seem to be driving this growth, though New England is still very strong in this sector.
General economic indicators that lead the manufacturing technology market also continue to be positive, though many stepped back a bit in May. This is most likely a reflection of the pause in April. Consumer sentiment fell less than a point, capacity utilization dropped by a little more than a half point, and the annual auto production rate for May fell by 300,000 units. These are the most modest of changes and the numbers support continued growth in orders. This point is punctuated by the slight rise in the Purchasing Managers Index, up to 58.7 from 57.3.
“The order levels are better than I would expect given supply constraints and trade issues plaquing U.S. manufacturers today,” said Pat McGibbon, AMT’s Vice President of Strategic Analytics. “Still, the numbers suggest that the best months are ahead starting with September and the boost that the International Manufacturing Technology Show always brings on fourth quarter orders in even-numbered years.”
More details from the report are available here.