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  1. Cutting Tools

Cutting Tool Orders Rising as Manufacturing Recovers

Dec. 20, 2020
Consumption of cutting tools – an index to overall manufacturing activity -- rose 7.6% in October, in line with the pre-pandemic level of demand, paced by growth in electrical and medical equipment, transportation equipment and basic metals sectors.

U.S. machine shops and other domestic manufacturing operations consumption $167.9 million worth of cutting tools during October, according to Cutting Tool Market Report issued jointly by the U.S. Cutting Tool Institute (USCTI) and AMT – the Association for Manufacturing Technology. The total represents a 7.6% increase over September’s result and a -22.4% shortfall of the October 2019 total.

The CTMR presents cutting-tool consumption as an indicator of overall manufacturing activity, as cutting tools are used in production of components used by virtually every industrial sector. The consumption totals are reported by participating companies that represent the majority of the U.S. market for cutting tools, and the wide application of cutting tools across multiple industries is comparable to durable-goods orders, according to the report's authors.
USCTI/AMT
A graph comparing the 12-month moving averages for durable goods shipments and cutting tool orders, demonstrating the relation of cutting tools to manufacturing activity. The October 2020 consumption total of $167.9 million was up 7.6% from September’s $156.1 million, but down -22.4% versus $216.4 million reported for September 2019.
A graph comparing the 12-month moving averages for durable goods shipments and cutting tool orders, demonstrating the relation of cutting tools to manufacturing activity. The October 2020 consumption total of $167.9 million was up 7.6% from September’s $156.1 million, but down -22.4% versus $216.4 million reported for September 2019.

"New orders for cutting tools rose a brisk 7.6% in October and are now back to levels not seen since March 2020. This recovery is in line with rising demand from manufacturers of electrical and medical equipment, along with better performance from traditional customers in transportation equipment and basic metals,” commented Mark Killion, Director of U.S. Industries at Oxford Economics.

The argument for a manufacturing recovery in progress is supported by AMT’s monthly U.S. Manufacturing Technology Orders report, a forward-looking index to manufacturing activity based on new orders for machine tools. According to the recently released October 2020 USMTO report, domestic manufacturers ordered $383.8 million worth of new capital equipment during October, 3.7% more than their September order total and just -0.6% less than the October 2019 total

USCTI/AMT
The month-by-month direction of cutting-tool consumption, October 2016 to October 2020. For the current year to-date, U.S. cutting-tool consumption stands at $1.6 billion, -23.0% versus the January-October 2019 period.
The month-by-month direction of cutting-tool consumption, October 2016 to October 2020. For the current year to-date, U.S. cutting-tool consumption stands at $1.6 billion, -23.0% versus the January-October 2019 period.
For the current year to-date (January-October 2020), cutting-tool consumption is reported as $1.6 billion, -23.0% versus January-October 2019, nearly in line with the October/October result.

“Cutting tool sales for October appear to confirm that at least the bleeding has stopped,” commented Bret Tayne, president of USCTI. “We may have taken a step backward in November as COVID cases surged and due to typical seasonality, but the overall direction is encouraging. The beginning of vaccine distribution, along with the potential for significant pent up demand in some customer segments, bodes well for our industry as we head into 2021.”