U.S. manufacturing technology orders climbed 6.5 percent in June over May, according to the latest U.S. Manufacturing Technology Orders (USMTO) report from The Association For Manufacturing Technology (AMT). The report also indicates a more than 10 percent year-over-year increase — the fifth consecutive month posting a year-over-year gain.
“If the USMTO numbers aren’t convincing enough that a recovery is underway, certainly the buzz among our members underscores that a recovery is indeed underway,” said AMT President Doug Woods in a press release. “Members have shared that the aerospace supply chain in the Midwest is hot; auto orders doubled between May and June; and sales in the Southeast exploded. Over the next six months, they look forward to a broadening of the recovery into areas like agricultural, construction, power generation and off-road machinery industries.”
Additionally, manufacturing expanded in July as the PMI registered 56.3 percent, a decrease of 1.5 percentage points from the June reading of 57.8 percent. This indicates growth in manufacturing for the 11th consecutive month and is the fourth highest reading in the last 12 months. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.
Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee states, "The past relationship between the PMI and the overall economy indicates that the average PMI for January through July (56.4 percent) corresponds to a 4.1 percent increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI for July (56.3 percent) is annualized, it corresponds to a 4.1 percent increase in real GDP annually.”
AMT has recently replaced one of its key indicators with the Gardner Business Index (GBI) which tracks well with USMTO and turned upwards markedly in December 2016, about 90 days before the recognizable upturn in USMTO.
“As we expected, machine tool orders have performed well in recent months. The backlog index from the GBI: Metalworking bottomed out in January 2016. The backlog index tends to lead machine tool consumption by 14 to 20 months. Since the backlog is still growing at an accelerating rate, we expect solid growth in machine tool orders through at least the end of 2017,” commented Steve Kline, Director of Market Intelligence, Gardner Business Media and creator of the GBI.
USMTO is a reliable leading economic indicator as manufacturing companies invest in capital metalworking equipment to increase capacity and improve productivity.