At the MTA Forecast Seminar this week – kindly sponsored by Marsh Commercial (an MTA Associate Member) – we published our new forecasts for the UK market for machine tools and cutting tools;  this was alongside the Autumn edition of the Global Machine Tool Forecast.  All of these documents and the presentations from the Seminar are available on the MTA website at  Please note that as this is a valuable member service, this is in the restricted area of the website and you will need your login and password to access this;  if you don’t have these, please contact Katie Beasley-Long at MTA (email:  [email protected]).

The following is a brief summary of the three sessions from the Seminar.  The presentations from Oxford Economics on the MTA website (currently only the bare slides are uploaded) will be updated with notes taken during the Seminar as soon as possible (the MTA presentation already has the notes).


The first session by Ben May, Director of Global Macro Research at Oxford Economics, looked at opportunities amidst a picture of general weakness across the global economy.  Although this has held up better than expected much of the boost in the first half of 2023 has been temporary.  A desynchronization of economies around the world provides some opportunities, although the world is lacking a “spender of last resort”, a role often taken by either the US or China in the past.

With economists divided on whether the US will actually see a recession – Oxford Economics still expect a short and mild recession in the quarters either side of the turn of this year – it is clear that the increases in interest rates have not yet fully worked through and financial conditions continue to tighten.  There will also be a drag from fiscal policy in 2024 and other developments such as the strikes in the automotive industry, only add to the uncertainty.

The growth model used by China of increasing investment to drive growth is largely broken as the economy has reached a size where this approach has become unsustainable.  However, with problems in the housing sector dragging down activity, the authorities are forced to try more of this stimulus, but without much success.  This will help for 2023 but next year looks likely to be steady at best as China transitions to growth around 3-4%.  While this has a big impact on the Chinese economy, the impacts in the rest of the world are not as dramatic as some might suggest.

In Europe, the big question is whether another energy crisis is on the way as we move into Winter.  Although the supply of gas remains limited and prices remain relatively high (but below the 2022 levels), storage levels are very high thanks, in part, to reduced consumption levels, so a crisis should be avoided.  This will be helped by an increase in supply from the French nuclear facilities that were off-line last winter and through improved supply from hydro-electric sources.  Europe (but not the UK) is also seeing a sharper fall in inflation which should help to support real household incomes.

In summary, 2024 looks likely to be another very weak year for much of the global economy.  Inflation will take some time to return to target and there are risks from both higher inflation expectations and an increase in oil prices.  Interest rates are only expected to fall slowly in most of the advanced economies, with the European Central Bank looking best placed to be the first to lower rates.

In concluding, Ben May pointed to some pockets of opportunity.  Market expectations for long-term interest rates look to be too high and some of the emerging economies that were the first to raise interest rates are already loosening monetary policy.  In particular, the Latin American economies are expected to outperform their pre-pandemic trends next year.  Japan, which did not have a spike in inflation and, therefore, did not raise interest rates significantly, is expected to be more resilient than the other advanced economics in 2024.

With the exception of the US, consumers still have significant amounts of excess savings which could provide a boost as inflation rates fall and technology such as AI could provide a boost to productivity, although the latter is more likely be a longer-term effect.


The second session was led by Jeremy Leonard, Managing Director of Global Industry Services at Oxford Economics, who drilled down into the industrial sector of the global economy.  Not surprisingly, this followed similar themes and it was pointed out that the industrial sector at a global level is already in a recession.

For investment, rates of capacity utilisation point to a downturn in the capex cycle but not a collapse in spending;  this hypothesis (“no collapse”) is supported by the high-frequency indicators for the industrial sector.  There is also a shallow trade recession coming in the next few quarters before growth resumes in the 2nd half of 2024.

Supply chain restrictions are now largely in the past but an over-compensation for this means that excess inventories could limit manufacturing production in the short-term.  However, we are still working through large backlogs in at least some parts of the capital goods sector but the semi-conductor industry has gone from a position of shortages to one of a glut.  This has taken the pressure off the automotive manufacturers who are working through backlogs but we look to be approaching the point where a lack of demand will take over from a shortage of supply as the main driver in this industry.

Although the move to electric vehicles will reduce demand for machining, in the short-term an increased use of hybrid vehicles actually increases this slightly;  in the medium term there will be opportunities from the transition to new energy sources such as wind power which will require activity in the mechanical engineering and metal goods sectors.

An increased use of automation – very widely defined – will also be critical for growth, especially in advanced economies which face challenges from demographic changes.  The aerospace industry also stands out as an area for growth;  the demand for flying is still below its pre-pandemic levels in Europe and Asia and unfilled orders in the sector (including defense related spending) are still rising.

Turning to the UK, Jeremy noted that the super-deduction scheme had driven a pick-up in capital spending, albeit one that had now ended, but that Brexit has caused a drop in the intensity of trade for the UK compared to the major EU economies by making the UK a less attractive place to invest, especially as a base for the large EU market.

In concluding this presentation, he highlighted the impact of inflation on the forecasts – they are all in cash terms so if growth of 7% is predicted for a market but inflation is also 7%, then the impact on volume is flat.  Overall, the global machine tool market is broadly flat this year and only slightly positive for 2024, before growth accelerates over the next couple of years led, unusually, by the Americas.


The final session covered our new forecasts for the UK market for machine tools and cutting tools as well as the Autumn edition of the Global Machine Tool Forecast which has just been published.

Geoff Noon, MTA’s Statistician, started by looking at the global picture which, in US$ terms, is in a period of little change overall;  the total market is expected to fall by around -2% this year before edging up by a similar amount next year.  Delegates were made aware of two issues to bear in mind in using these reports;  as noted above, the impact of inflation needs to be borne in mind, while global and regional totals rely on using a single currency, so exchange rates can also have an effect of the overall totals.

The regional patterns, unusually, look different over the next couple of years;  perhaps most notably, while the Americas is likely to be the weakest in 2024 given the fall in US orders this year, it is the strongest region in the recovery phase through 2025/26,

Turning to the UK forecast for machine tools and cutting tools, it was noted that 2023 has turned to be much stronger, although for different reasons in the two markets.  The impact of the super-deduction scheme, especially in the 1st quarter of 2023 (the last period before the scheme ended) was much larger than had been forecast and means we have a small positive in the machine tool market this year;  cutting tools has outperformed the forecast thanks to a stronger than anticipated recovery in the automotive and aerospace industries which are working through large order backlogs.

Partly as a result of the higher levels in the market for this year, we now expect a modest downturn – around -5% – in both markets for 2024.  However, especially in the case of machine tool demand, it is not quite as bad as it seems as the main issue is that the single very strong period (Q1-23) is not repeated and if the forecast is split into half-years, we see a positive trend for the 2nd half of next year.

Other limitations for machine tool demand include a weakening of investment intentions and the rise in interest rates – we are now seeing cost of finance being mentioned more often as a constraint on investment in the CBI survey, as well as our own Business Survey.  For tooling demand, the issues are more about a general weakness in activity in some customer industries, coupled with the fact that the automotive industry is coming to the end of its order backlogs and low consumer demand will be more important in the short-term.  The one bright spot is aerospace where order backlogs are still rising as the world gets back to flying after the pandemic.

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