Upwards growth for US manufacturing good for Canada
- September 11, 2017
US manufacturing technology orders (USMTO) continued to expand in July, up 23 per cent from July 2016. The positive news follows recent data from Canada that continues to see upwards growth in this country two. Together, these actitivites are good indicators that 2018 promises to be a better year for manufacturing in North America.
According to USMTO, the July 2017 rate of increase is "a notable acceleration in growth relative to the 10 per cent increase in June orders posted over the previous year."
The nearly three year decline in the US manufacturing technology market turned the corner last March with a string of year-over-year improvements in order levels. IMTS 2016 rekindled the market last fall but it was not until March that year-over-year numbers began to consistently show a positive, accelerating trend upwards. At the current expansion rates, manufacturing technology orders are likely to outpace the growth rates analysts forecasted at last October’s Global Forecasting and Marketing Conference hosted by AMT.
“It is encouraging to see the US manufacturing markets and economy improving, especially when the European and Asian markets are not doing as well,” says Doug Woods. “AMT is excited about the prospects for 2017 and the possibilities in 2018, particularly if Washington takes steps to address tax reform and infrastructure spending.”
Orders posted in July are typically down 15 per cent from the previous month. This year, orders followed that historical summer trend coming in at $320 million, off 19 per cent from June orders of $397 million.
“AMT members noted the marked difference in the start of this summer season,” adds Pat McGibbon, AMT vice president of Strategic Analytics. “Usually quotations and leads start to slow in the summer but that has not been the case in 2017.”
Several large projects converted mature quotations into major orders with bundled add-ons such as special tooling and automation. The contract machine shop sector, where companies typically buy one or two machines at a time, was one of the stronger markets in July, representing 41 per cent of all the units ordered in July and 32 per cent of the total July dollar value. The big surprise was a jump in defense orders from less than one per cent of total orders to 4 per cent in July – more than a 10-fold increase. Medical equipment and agricultural equipment sectors were up 10 percent and seven per cent respectively.
USMTO tracks well with the US Purchasing Managers’ Index (PMI) produced by the Institute of Supply Management. Any mark over 50 represents an indication of expansion. The index is 56.3 in July up from the June level. Business’ profitability over the past three quarters primes the pump for expansion on corporate investment in new durable goods and production equipment. AMT has recently replaced one of its key indicators with the Gardner Business Index (GBI) which has tracked well with USMTO in the past and turned upwards markedly in December 2016 about 90 days before the recognizable upturn in USMTO.