New orders of manufacturing technology reached $365.9 million in May 2023, representing an 8.6% increase over April, but falling short of May 2022 orders by 16.7%, according to the U.S. Manufacturing Technology Orders Report by AMT – The Association for Manufacturing Technology. Annual orders for 2023 rose to $2.1 billion, about 15% behind the orders for the same period in 2022.
While job shops showed a slightly faster pace of order growth, many large consumers of manufacturing technology experienced a second consecutive month of decreased orders, offsetting the overall increase in May. However, interesting shifts were observed in the industry, particularly from smaller consumers, indicating changes in manufacturing practices driven by government spending programs.
The electrical equipment manufacturing sector saw its highest monthly order level of 2023, with efforts focused on grid resilience to combat unusual weather patterns. Additionally, the Grid Resilience and Innovation Partnership program, part of the 2021 Bipartisan Infrastructure Act, is expected to drive further investment in manufacturing technology from this sector with approved projects to be announced this summer.
The construction industry also showed promising growth in manufacturing technology investment, as construction machinery manufacturers doubled their order volume compared to April 2023. The residential construction sector has contributed to the increasing need for capacity, with new housing starts experiencing a significant surge in May and new permits showing an upward trend since the beginning of the year. Moreover, real construction spending on new manufacturing facilities has doubled since the end of 2021.
Despite positive economic indicators such as an upward revision to Q1 GDP and continued employment strength, the manufacturing technology industry is displaying signs of a slowdown. Federal Reserve Chair Jerome Powell's remarks in June about elevated interest rates impacting manufacturers of durable goods, who are significant consumers of manufacturing technology, suggest a potential downturn in the industry. It remains to be seen whether this situation resembles the downturn in 2016, which avoided a broader recession, or follows the predictions of economists likening it to the 2001 scenario.
As the manufacturing technology industry navigates these challenges, ongoing data analysis will be crucial in determining the extent and nature of the economic situation, and its implications for the industry's future.
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