December 2023 orders of manufacturing technology, measured by the U.S. Manufacturing Technology Orders Report published by AMT – The Association for Manufacturing Technology, totaled $491 million, up nearly 22% from November 2023, and nearly 12% above December 2022.
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This was the second-highest order level in 2023 and the first month of the year to outperform 2022 order levels.
Orders in 2023 totaled $4.94 billion, 11.2% behind the $5.56 billion recorded in 2022. Although a decline, orders in 2023 surpassed many predictions, with some of the most pessimistic forecasters expecting the year to be down nearly 20% from 2022, according to AMT.
Contract machine shops decreased their 2023 orders just over 21% compared to 2022. This customer segment, the largest customer for manufacturing technology, is mostly small- to medium-sized businesses, so their capital investment tends to be tied to a shorter-term economic outlook, according to AMT. Even with their pullback in orders, 2023 exceeded expectations due to investment from larger OEMs, which tend to operate on much longer production schedules.
Automotive orders in 2023 rose 2% from 2022. This growth came primarily from manufacturers of automotive transmissions, who made their second-largest investment since 2000, falling short of 2015 by only 1.3%. While a lot of attention has been paid to investments in electric vehicle production lines, such as the one recently announced by Toyota, automakers have also been heavily investing in production lines that make traditional internal combustion engines.
Although the aerospace sector’s 2023 orders decreased nearly 9% from 2022, it still recorded its fourth-best year for manufacturing technology orders. The aerospace sector decreased orders in 2023 by less than the overall market and is positioned to continue investing in manufacturing technology in 2024.
Manufacturers of ventilation, heating, air conditioning and commercial refrigeration equipment made the largest investment in manufacturing technology since 2012, increasing orders by over one-third from 2022. This investment was likely driven by the massive uptick in new construction that was brought about by recent government legislation and investment, such as the Chips and Science Act, Inflation Reduction Act and Infrastructure Investment and Jobs Act.
Orders of manufacturing technology outperformed expectations in 2023, and there are several reasons to believe the momentum will carry over into 2024, according to AMT. For example, shipments of cutting tools increased in 2023 by nearly 7%, as measured by the Cutting Tool Market Report, a collaboration between AMT – The Association for Manufacturing Technology and the U.S. Cutting Tool Institute.
This increase in shipments of consumables used in the metal machining process indicates that machines in the field are increasing output. This is a good sign for machinery orders in 2024, as increased output could signal a coming need for additional capacity.
