Manufacturing technology orders totaled $467 million in October, capping a three-month total of $1.6 billion since August. That sum represents the largest three-month total since April 1998. The $4.5 billion year-to-date sum is up an impressive 24 percent from the same 10 months in 2017 and bodes well for a strong finish to 2018. The three-month run overshadowed the 23 percent decline in October orders from September and slim 2 percent increase over October 2017.
“IMTS always creates a September jump in orders, but the strength of October and August punctuates that the market is buying for current capacity need, not speculation on future business,” said AMT President Doug Woods. “Right now, manufacturing technology orders are rapidly expanding without apparent concern for trade issues or evolving market conditions because our customers face enormous opportunities now.”
Every region posted lower order levels in October over September. Still, the year-to-date growth in orders remains strong. The Northcentral East posted the smallest gain over 2017 year-to-date at 12 percent. The improvement in orders reflects larger capital spending by the off-road and highway construction sector as well as some significant investment by the medical equipment sector. The Southeast region has typically been the fastest growing region over the past several years.
However, the Northcentral West region is up 36 percent through the first 10 months of 2018 over 2017, growing one percent faster than the Southeast. The Northcentral West’s growth is in large part due to power generation equipment, aerospace, medical, and a couple of significant orders in the construction and highway equipment industry.
This is the time of year that users of manufacturing technology typically scramble to put new equipment in service for tax purposes. AMT members report that need, not tax issues, are dominating quotations and inquires in November and December. This is a testament to the stability that tax reform has brought to the investment process for businesses of all sizes. Members are enthusiastic about the opportunities that current quotes and inquires are likely to yield by year’s end.
“In September, our members were concerned about getting precision components. Today, the major challenges are scheduling trucks for delivery and riggers for installation before the end of the year,” said Pat McGibbon, vice president, AMT Strategic Analytics.
Most of the key indicators are very strong. Durable goods orders in October were down from September and August, but $249 billion is above the average over the past 12 months. Consumer confidence was down slightly in November, while the Institute for Supply Management’s Purchasing Managers’Index was higher. These indicators suggest continued growth in manufacturing at slower rates. It is very encouraging that with the significant increase in capital spending on capacity, capacity utilization rates continue to creep upwards.