Manufacturing orders drop to lowest level in three years
Manufacturing orders dropped by a third in January 2020 as anxiety about the coronavirus outbreak, as well as other manufacturing challenges, threaten to weigh down on general economic optimism.
U.S. manufacturing technology orders decreased 32% in January from the previous month to $269 million, according to the latest U.S. Manufacturing Technology Orders (USMTO) report published by the Association For Manufacturing Technology (AMT). January manufacturing technology orders were the lowest since January 2017. New orders placed in January 2020 fell 34% from January 2019.
“Based on our economic forecasts, we projected that the beginning of 2020 was going to be challenging for manufacturers, and indications were that growth would resume mid-year. However, it now appears that the coronavirus will likely impact a turnaround in manufacturing technology on several fronts,” said Douglas K. Woods, president of AMT. “Global travel and commerce will be negatively impacted, supply chains in Asia will continue to be disrupted, and purchasing decisions will be delayed due to uncertainty. In previous outbreaks such as SARS and MERS, the economic downturn lasted several months, and economies quickly rebounded after the threat subsided and demand returned. We would expect a similar scenario in this case, as well.”
“While our industry will be affected by the coronavirus outbreak, there are notable bright spots in the economy that indicate a solid recovery after the virus subsides. One bright spot in economic news is that the PMI index was back up in January, moving past 50, and indicating that the market will expand. Additionally, consumer sentiment inched up half a percent from 99.3 to 99.8%. Housing starts were also positive, up 21.4% over last January and at a higher level than average for the past ten years. These data all indicate that the fundamentals of the U.S. economy are strong, and this should aid in a quick recovery.”
This will remain to be seen in the wake of the oil market taking a sharp downturn, which has added to the global economy’s economic anxiety in recent weeks. Hannover Messe delaying their annual trade show last week to July 2020 due to travel concerns about the virus spreading is the latest high-profile impact on the global manufacturing industry.