Machine Tool Orders Fall in November

WASHINGTON — U.S. manufacturers decreased their orders for machine tools in November for the second month in a row, while demand from abroad rebounded, according to industry figures.

U.S. orders for machine tools dropped 22.8% during the month to an estimated $647 million, the Assn. for Manufacturing Technology and the American Machine Tool Distributors Assn. said. In October, machine tool orders totaled an estimated $838 million. Demand fell in four of the five regions the industry groups use to chart U.S. machine tool orders.

For the year to date, estimated consumption totaled $7.7 billion. No comparison with 1995 year-to-date figures is possible because the industry groups switched their method of calculating orders in August 1996.

“Despite this customary seasonal variation, 1996 promises to be an outstanding year for the machine tool business and one in which all regions of the country are participating,” AMTDA President Ralph Nappi said. Economists, who follow machine tool orders to gauge industrial output, consumer demand and business investment, expect machine tool sales to pick up in 1997.

Machine tools are used to shape and assemble metal in products. Orders tend to decline in November when companies calculate their year-end budgets. Also, as a result of the International Manufacturing Technology Show in September, “There was a big burst in orders in September and October and then a slump in November,” AMT spokesman Robert Gardner said. “November isn’t a bad month. It’s just not as good as the two previous months.”

The industry estimates are extrapolated from actual orders placed by American manufacturers with U.S. and foreign companies. They are designed to give a more complete outlook of the industry than actual orders, which are lower because not all companies report their transactions.

Actual machine tool orders declined 6.9% to $420.79 million in November from a revised $451.95 million in October, the industry groups said. Total units ordered fell 7% to 3,108 for the month from 3,342 in October. Demand for machine tools from abroad, counted separately from domestic orders, rose 4.8%, to $41.65 million in November from $41.17 million during October.

Although U.S. November orders fell, some tool makers say business was robust heading into the new year. “Orders are doing fine,” said Milt Chase, vice president of Machine Tool Supply Inc. of Milwaukee, a distributor of metal-cutting tools. Company sales in 1996 were up 15% to 20% from last year, Chase said.

The machine tool industry report tempered a recent private economic report that showed manufacturing picking up. The National Assn. of Purchasing Management said earlier this month that its manufacturing index rose to 54.0 in December from 52.7 in November as orders and prices increased.