In May 2024, manufacturing technology orders totaled $386.7 million, according to the U.S. Manufacturing Technology Orders Report by AMT – The Association For Manufacturing Technology. This represents a nearly 22% increase from April 2024 and a 6.5% rise compared to May 2023. It marks the first instance in 2024 where monthly orders have surpassed those of the same month in the previous year.
Despite this recent surge, total orders for the first five months of 2024 have amounted to $1.8 billion, reflecting a 12.2% decrease compared to the same period in 2023. Manufacturers appear to be adjusting to the Federal Reserve’s extended “higher for longer” interest rate policy, prompting increased capital equipment purchases to address persistent consumer and business demand despite ongoing high rates.
Though 2024 has seen a slight downturn in overall machinery orders compared to early 2023, cutting tool orders remain robust. The Cutting Tool Market Report, a joint effort between AMT and the U.S. Cutting Tool Institute (USCTI), shows that cutting tool consumption is maintaining record levels. This stability suggests that production rates are strong, as corroborated by industrial production data from the Federal Reserve.
Contract machine shops, the largest consumers of manufacturing technology, have increased their orders from April to May 2024. However, this growth is notably slower than the broader industry trend. While some original equipment manufacturers (OEMs) have continued to invest despite high interest rates, contract machine shops have lagged behind the overall market throughout the year.
Electrical equipment manufacturers are experiencing their strongest start to the year since early 2022. Manufacturers of power generation and transmission equipment are also investing at their second-highest year-to-date rate since 2008. These sectors are benefiting from government investments authorized by the CHIPS and Infrastructure acts, which have made them less sensitive to interest rate fluctuations. With the Biden administration eager to utilize remaining funds from these bills before potential changes in leadership, there could be a boost in spending, particularly if public sentiment shifts following President Biden’s recent debate performance.
The automotive sector has continued its machinery purchases, though at a slower rate than in the previous two years. Vehicle assemblies rose in May 2024 and remain above the average monthly level for the year. This trend suggests that both manufacturers and consumers may be adjusting to the Fed’s interest rate environment, with increased vehicle sales in April and May indicating a possible shift in consumer behavior.
Overall, while the Fed’s interest rate policy has disrupted many economic forecasts since the start of the year, the manufacturing technology orders outlook has improved recently, narrowing the gap with 2023 figures.