McLEAN, Va. — Orders of manufacturing technology, measured by the U.S. Manufacturing Technology Orders report published by AMT – The Association For Manufacturing Technology, totaled $321.7 million in July 2024.
Orders declined 19.3% from June 2024 and declined 7.8% compared to July 2023. Year-to-date orders reached $2.53 billion, a decline of 10.5% from the first seven months of 2023.
July is typically one of the slower months of the year for manufacturing technology orders. Despite that, July 2024 is 3.8% above the pre-2020 average for the month. Cancellations were the highest since July 2023, and the ratio of cancellations to new orders remained above the historical average in all but two months of this year. Despite these mixed messages, there are signs that the industry may be at the beginning of the anticipated rebound. While the value of orders declined from June to July 2024, the number of units ordered in July 2024 increased by 1.9% over June 2024.
Contract machine shops, the largest customer of manufacturing technology, outperformed the market for the first time in several months. The value of manufacturing technology orders contracted less than 5%, while the number of units ordered increased nearly 10% from June to July. This indicates that shops are beginning to expand capacity in anticipation of their customers placing additional orders for parts.
Conversely, medical equipment manufacturers increased the value of their orders from June to July 2024 while decreasing the number of units. With a manufacturing process that requires high precision, traceability, and customization, the medical industry typically places orders for more sophisticated machinery. Some estimates predict this industry will grow by 50% between now and 2029, so this sector is poised to become a reliable customer of manufacturing technology.
Orders from manufacturers of electrical generation and distribution equipment were flat from June to July 2024. However, because July was a down month, they comprised a larger share of the total orders. This sector has pulled back orders from their peak in early 2023 but remain on an upward trend. Increased power demand from data centers as well as a larger focus on grid modernization has made this a very important sector for manufacturing technology.
After Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole Economic Symposium and the weak August jobs report, a rate cut at the Fed’s September meeting is all but certain, according to market reactions. Assuming the Fed has managed to guide the economy to a soft landing, predicting how machine tool orders will react is difficult due to the lack of historical examples of soft landings – especially compared to the many examples of recessions. Still, with the anticipated rate cut expected to begin alleviating some concerns of households and businesses, renewed demand up and down the supply chain may be on the doorstep as manufacturers converge on Chicago.