What do the markets have in store after IMTS?

One more IMTS is in the books and it proved to be another fantastic show for our industry with more than 115,000 attendees and a record number of exhibitors. On display throughout McCormick Place was a wide variety of new and improved technologies – things that make the United States among the most innovative countries in the world. And while the show may have been a great success and spurred millions of dollars in new orders, it’s important to be prepared for when the IMTS Effect wears off. 

The IMTS Effect

Attendance at the show may not have been up, but this was a more concentrated and deeper buying pool than we have seen in the past. This is great news for the manufacturing technology industry in what has otherwise been a lackluster year. The hope is that the IMTS Effect will last for a solid 60-90 days, bringing in a substantial amount of new orders for a post-show boost. 

Attendees went to the show for three main reasons. First, they were interested in replacing their older machines. Second, attendees wanted to see the new technologies on display and this year did not disappoint, with exhibitors showing off new innovations like hybrid machines that can do both additive and subtractive machining. Lastly, there was a good portion of attendees who were interested in the productivity gains offered by manufacturing technology – particularly automation. As the market for skilled labor continues to stagnate, many companies are looking for ways to improve the productivity of the employees they currently have and to make those workers more effective. On all fronts IMTS delivered, and it is likely to keep delivering for the next two to three months, but there is still a hangover to come at the end of the year.

What happens next?

The general consensus among the economists that AMT works with is that the fourth quarter of 2016 and first quarter of 2017 will revert back to the uninspiring numbers we saw earlier this year. Once the dust has settled from IMTS, the economists don’t expect a sustained improvement in the manufacturing technology industry until spring 2017 because fundamental problems still exist. Durable goods orders are down, housing starts have stalled and unemployment numbers have leveled off. Additionally, there is a concern that this summer's lull in capital spending by the aerospace and auto industries might reappear in January as decisions on new projects are reevaluated.

Searching for brighter days

There are some bright spots to look forward to as a turnaround is expected this spring. China’s growth is catching up as inventory in the country has been trimmed. The EU doldrums continue but increased employment numbers and strengthening wage rates suggest a pickup in the EU economy in the next two quarters. The modest improvements in the Chinese and EU economies should lead to stronger demand for basic materials and intermediate goods purchasing, which should lead to creating a more robust manufacturing sector.  It will be these areas, stronger exports and a confluence of other factors that lead to a strong rebound in the second quarter of 2017. The one concern is whether the Fed will be able to offer much help if the economy encounters a hiccup. A historical look at the Fed’s past easing cycles suggests that its aid may be spent. 

If you’re looking for a silver lining, what better place to look than sunny Miami, Florida? AMT’s 44th Global Forecasting & Marketing Conference will explore all of these topics and more. Our aerospace expert, Richard Aboulafia, will help you find opportunities in nontraditional places like Mexico and the southeastern United States. Our automotive speaker, Michael Robinet, will demonstrate how to take advantage of the new investment in manufacturing technology that will come as a result of automakers trying to adjust to stricter CAFE standards. Our election keynote, Kyle Kondik, will illustrate the affect presidential politics could have on our industry. With more than a dozen economists, business leaders and industry experts in the program, GFMC is the resource you need to prepare for the next upswing in the market. Register at AMTonline.org/GFMC.

Foreign Trade Report – July

U.S. machine tool exports valued $175.81 million in July, down 14.3 percent from June’s total of $205.05 million. Exports for year-to-date 2016 totaled $1,180.45 million, a decrease of 16.8 percent when compared to the same period for 2015. Monthly machine tool imports valued $449.32 million in July, up 14.9 percent from June’s total of $390.99 million. Imports for year-to-date 2016 totaled $2,683.33 million, a decrease of 12.4 percent when compared to the same period for 2015.

Mexico was the leading destination for U.S. machine tool exports in July with $39.22 million, a 27.9 percent decrease from June. The second largest destination for U.S. machine tool exports was China, with $21.11 million, a 46.6 percent decrease from June. Completing the top five destinations for U.S. machine tool exports were Brazil ($12.09 million), Canada ($10.51 million) and Japan ($9.70 million).

Japan ($171.04 million) and Germany ($77.98 million) were the top suppliers of U.S. machine tool imports for July 2016. Compared to June’s figures, Japanese imports increased by 11.6 percent and German imports increased by 11.8 percent. Completing the top five sources of U.S. machine tool imports in July were Italy ($32.86 million), Taiwan ($32.47 million) and China ($24.11 million).

For more information about any aspect of this report or to make a specific data request, contact Juan Guerra at jguerra@AMTonline.org or 703-827-5278.