MCLEAN, VA – Orders of manufacturing technology in August dropped 12% from the same month last year, totaling $360.8 million, according to the Association for Manufacturing Technology's US Manufacturing Technology Orders (USMTO) report.

While orders continue to lag behind those placed in 2023, the level of order activity remains above historic levels, with August's orders being 3.8% above those placed in a typical August, the report said. This trend indicates the industry is still undergoing a period of normalization following the Covid disruptions rather than a true decline. Historically elevated capacity utilization rates across durable goods manufacturers indicate a very real need for additional investment in manufacturing technology.

Contract machine shops, the largest customers of manufacturing technology, increased both the number of units ordered and the value of their orders for the first time since March 2024. This growth in a key customer segment is a welcome sign after a sluggish July saw the lowest value of orders since May 2020 and the fewest units ordered since July 2010. Since job shops typically absorb elevated capacity needs from OEMs, this buying trend indicates that production could continue to grow.

Manufacturers in the aerospace sector increased the value of their orders by 13% from July to August 2024, but the number of units increased by nearly 27% in that same time. This indicates their purchases are for additional capacity, which is confirmed by the persistently increasing capacity utilization rates in the sector. While machinery orders from manufacturers of aerospace parts have been strong in the past few months, the ongoing strike of Boeing machinists has the potential to dampen this demand. It would be tempting to compare this to the 2023 United Autoworkers strike, which had almost no impact on orders for manufacturing technology from the automotive sector. However, at that time, the automotive industry had already been pulling back orders after a historically elevated buying cycle over the summer of 2023. Additionally, capacity utilization rates were falling and inventories growing leading into the strike. The aerospace sector is in a decidedly different position, with increased orders, a buying cycle on an upswing, and capacity utilization increasing for the past three years. Only time will tell how the Boeing strike could impact machinery orders.

Although August 2024 orders fell short of those placed in 2023, the outlook for the remainder of the year remains optimistic. With the upcoming US presidential election and the Federal Reserve beginning to reduce interest rates and signaling additional reductions, two of the major issues giving pause to additional capital investment will be alleviated by year’s end. Given these factors, as well as the coming expiration of bonus depreciation of capital equipment, the momentum of order activity in the last four months of 2024 will likely accelerate and could carry over into 2025, as forecast by experts at AMT’s annual MTForecast conference.

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