Machine Tool Spending Trends

One good indication whether businesses are investing is spending on machine tools. The picture is not real rosy at this juncture, but it is improving, according to news from the industry's associations. China, say industry representatives, is the looming threat to U.S. tool builders.

U.S. machine tools orders spiked higher in June then retreated for the remainder of summer, yet hopes are growing that capital investment purse strings should begin to loosen by the fourth quarter, machine tool executives say.

Working in favor of the industry is a weaker dollar against the euro, which is compelling some foreign manufacturers to transfer operations into the United States, but the dollar isn't budging against the Chinese yuan, where it would truly make a difference for U.S. manufacturers, they say.

Many believe pent-up demand and a cautious build-up in capital investment should give rise to a better outlook in the fourth quarter, although they also remind that similar projections in the past set the stage for subsequent disappointment.

Yet another driver is tax breaks aimed at re-energizing capital investment, which may have contributed to the June spike in orders.

June U.S. machine tool consumption rose by 67% over May, and 3% over the prior June, the first instance of year-over-year growth since November 2000, according to data released by the American Machine Tool Distributors' Association (AMTDA) and The Association For Manufacturing Technology (AMT).

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