Market Deserves a Second Glance

dollarsBy Pat McGibbon
Vice President-Industry Intelligence
AMT-The Association For Manufacturing Technology

This article originally appeared in ThomasNet News’ Machining Journal.

When AMT-The Association For Manufacturing Technology issued its July USMTO release in early September, there were dozens of calls. Most were about the aberration in the forming data due to a change in participants. Those were easy to address. More difficult to answer were the questions about the 23.6% drop in orders July 2013 over July 2012. The best way to allay those concerns is to put the year in perspective. The market through July 2013 was just 7 percent below the first seven months of 2012 — the best year recorded since USMTO began as a program. And, the last third of the year looks very promising. The August USMTO report was a 4.9% improvement over July.

A quick snapshot of the global situation suggests improvements in most areas, which reduces the competitive stress we have been feeling in the U.S. Since last November, import data have shown a modest build up in imported inventories that appear to have stopped or slowed to a level we can’t measure. The change is likely because key markets in Asia are improving.

Japanese Prime Minister Shinzo Abe’s recent speech from the floor of the New York Stock Exchange painted a Japan on an accelerated growth path, with expanding investment in manufacturing both at home and abroad. Chinese stock markets surged in recent weeks, as economic news out of that country significantly exceeded expectations.

The EU manufacturing technology market seems to have stabilized. Last month’s EMO Hannover 2013 welcomed nearly 145,000 participants, whose chief motive in attending wasn’t to shop, but to invest. The financial situation in the EU seems to be improving, punctuated by the news out of Ireland, as it exits the bailout scheme set with the EU.

The rebound and expansion in Asia and the EU, home to our industry’s major competitors and significant customer bases, is a welcome situation for U.S. manufacturing technology providers. The economic pick-up globally translates into less stress in our home market and greater opportunities overseas. This is probably best illustrated in the trade numbers. U.S. manufacturing technology exports are up 2 percent, while imports have fallen by 9 percent. Advanced manufacturing products show a 9 percent growth in exports and a 14 percent decline in imports.

The situation domestically seems to be on the right track as well. Many of the economic indicators that we track at AMT are showing positive signs, and manufacturing technology looks like it will be on a stable growth path over the next 90 days.

Of course, we narrowly averted a major fiscal crisis here in the United States when Congress passed a spending bill to reopen the government and raise the debt ceiling through early next year just hours before a U.S. default. It remains to be seen if there will be any long-term economic impact from the impasse, but another round of potentially contentious budget debates will be on our doorstep again in January.

If there are no political situations that create external pressure on the manufacturing sector, the outlook for 2013 would appear to be on track with the forecasts given in October 2012 at AMT’s Global Forecasting & Marketing Conference — which included modest fall off from 2012 levels. Certainly, our industry’s customer base is doing well, expanding and holding cash on hand to make investments.

Still, our elected officials know how to make mud out of a cherry pie. Washington came perilously close to derailing the recovery of the manufacturing sector and our economy. The lack of bipartisan cooperation on critical issues affecting our global competitiveness could haunt us in the closing months of 2013. However, despite the challenges, the analysts at AMT remain optimistic for the future.



Categories: Economy/Markets

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