Flash Purchasing Managers Index, February 2024:  The flash manufacturing Purchasing Managers’ Index (PMI) for February 22, 2024 is little changed from the previous month’s reading, having edged up to 47.1 (from 47.0 in January).

There is some good news in that the output element of the index improved from 45.5 to 47.3 although part of the level is due to an increase in suppliers’ delivery times (this is perversely taken to be a sign of increased activity in the calculation) as a result of shipping delays around the Red Sea.  The counter-point to this is that orders, especially for exports, fell at a steep and accelerated rate for the manufacturing sector and employment in the sector fell at the fastest pace since June 2020.

In the Euro-zone, the overall manufacturing PMI reading eased downwards in parallel with the movement for the output element of the index.  In part this is because they are reporting an easing of suppliers’ delivery times (which also helped to ease input price increases) compared to January which has a negative impact on the calculation of the PMI.  New orders also continue to be negative but the pace of the decline continues to ease.

At this stage, we only have country reports for France and Germany and we see opposite trends although the overall manufacturing PMI remains significantly negative in both countries.  Compared to January, there was a sharp fall in both the overall index and the output element in Germany, with the PMI at a 4-month low of 42.3;  in contrast, the pace of decline of both the PMI and the output element in France eased to 11-month highs with the manufacturing PMI at 46.8.  In the rest of the Euro-zone, manufacturing output was close to the neutral position.

Similarly, although they bare both still in contractionary territory, new orders fell at a faster pace than in January for German manufacturers but the pace of decline eased in France.

In Asia, India continues to be the start performers with the overall manufacturing PMI edging up to a 5-month high of 56.7 thanks mainly to an acceleration in the output element of the calculation.  Orders are also still growing, especially from overseas for Indian manufacturers.  However, in Japan, an acceleration in  the pace at which production is contracting dragged down the overall manufacturing PMI to 47.2;  this is the weakest of 9 consecutive negative readings.  There was also a steep reduction in new orders and the index was helped down by an easing of suppliers’ delivery times.

Finally, in the USA, an improvement in output which moved back in to expansion territory, helped the manufacturing PMI improve to a 17-month high of 51.5 (note that the overall index was already above the 50 threshold in January).  An easing of suppliers’ delivery times acted as a slight brake on the overall PMI (this is assumed to be a sign of weaker activity although in this case it represents an easing of shipping constraints and better weather than in January).

These reports are available on the “PMI by S&P Global” website at https://www.pmi.spglobal.com/Public/Release/PressReleases or on request from MTA.


USMTO and CTMR, December 2023:  The US Manufacturing Technology Orders (USMTO) programme tracks orders in the US market, based on the reports from participants in the survey and with publication of the December figures, we now have the data for the whole year.  Machine tool orders in 2023 were -11.2% lower than in 2022) – while negative, it is noted that like the US economy as a whole, demand for machine tool has exceeded expectations

The AMT press release also notes some variations between the customer industries.  While orders from contract machine shops (the largest industry in the survey) has fallen by -21%, the decline from aerospace companies was only -9% while orders from the automotive industry increased by +2%.  There was also a strong increase in demand from industries such as ventilation, heating, air conditioning & commercial refrigeration equipment where investment was probably driven by the upturn in new construction stemming from recent government legislation and investment, such as the Chips & Science Act, Inflation Reduction Act, and Infrastructure Investment & Jobs Act

The regional breakdown of the data also points to variations across the country.  Three areas – the North-East (-2%), South-Central (-3%) and North-Central-East (-5%) were ahead of the overall market trend and the North-Central-West (-12%) and the South-East (-13%) areas were only just below;  the weakest region in 2023 was the Western region (-29%).

The US Cutting Tool Market Report (CTMR) tracks orders for tooling on a similar basis. In this part of the US market demand increased by +6.9% compared to the 2022 total, although it is worth noting that the pace of growth appears to have slowed in recent months.  There is no regional breakdown for the cutting tool data.

The press release on the survey results notes that 2024 is likely to be a mixed picture with industries such as aerospace, automotive, medical and computer-related segments offering opportunities for growth while other industries are likely to decline.

You can download the press releases for the two surveys from the AMT web-site at https://www.amtonline.org/topic/intelligence, with the CTMR release also published on the USCTI web-site at www.uscti.com (go to the News tab);  alternatively, you can request either or both releases from MTA and we can make sure you get them when they are published each month.  We have attached a set of charts tracking the rolling 12-month totals from these two surveys which you can download below.

Japanese Metal Cutting Machine Tools Orders, 4th Quarter 2023:  The Japan Machine Tool Builders Association (JMTBA) also publish monthly orders data although, in this case, it covers business done by Japanese manufacturers rather than the market and they only cover metal cutting machine tools (there is a separate association in Japan for manufacturers of metal forming machines).  However, given the relatively low import ratio in Japan, the domestic orders series will be a good guide to the market situation.

Total orders in the 4th quarter were -2% lower than in the previous period but for the year as a whole, demand fell by -15.5% compared to the 2022 level.  Breaking this down a little, domestic orders fell by -13% in the final period of the year and by -21.0% comparing the 2023 total with the year before;  for export demand the trends were +3% and -12.7% respectively.

The JMTBA report gives a breakdown of the domestic orders by industry (we will just look at the 2023 data here).  The largest group by value is industrial machinery where orders fell by -16% compared to the 2022 total;  demand from the automotive industry was down by -25%, electrical machinery by -36% and precision machinery by -27%.

The only positive trend for last year came in the other transport equipment industries where orders grew by +7% – this was entirely due to the aerospace segment where orders increased by +47%, although this is a relatively small industry in Japan (the 2023 figure was less than 2% of total domestic orders.

Analysis of export orders for 2023 shows most countries and regions in negative territory but there were some plus signs in the table;  export orders were higher than in 2022 for Switzerland (+28%), Turkey (+27%), Brazil (+26%), India (+26%), Mexico (+22%), Canada (+15%) and Germany (+6%).  The most notable declines were in orders from Taiwan (-44%), China (-27%), South Korea (-24%) and Italy (-22%) while orders from the UK also fell (-7%). You can access the JMTBA report at https://www.jmtba.or.jp/english/category/machine-tool-orders/ (November 2, 2023) or we can send you the summary of the data – contact Geoff Noon at MTA (email:  [email protected]) if you want this analysis.  A chart showing the 12-month rolling totals is available to download below.

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