Dmitry Kalinovsky | Dreamstime
Close-up of machining by milling cutter with hard metal carbide insert.
  1. Cutting Tools

Cutting Tool Demand Remains Strong

April 18, 2024
An important index to manufacturing activity has shown rebounds in monthly orders and growth in shipments to begin 2024, countering the general uncertainty about the strength of industrial activity.

In a critical indicator of the strength of industrial activity, U.S. machine shops and other manufacturers ordered $214.6 million worth of cutting tools during February, +4.9% more than during January and +9.0% more than during February 2023. The two-month order volume for 2024 is $419.1 million, +6.5% above the total for January-February 2023.

The figures are drawn from the monthly Cutting Tool Market Report, compiled by the U.S. Cutting Tool Institute and AMT - the Assn. for Manufacturing Technology.

USCTI/AMT
This graph compares the four-year moving averages for U.S. durable goods shipments and U.S. cutting-tool orders, demonstrating the relation of cutting tools to overall manufacturing activity. The values are calculated by taking the average of the most recent 12 months and plotting them over time. The February 2024 cutting-tool consumption total of $214.6 million is a 4.9% increase over the January result, and a 9.0% rise from the February 2023 result.
This graph compares the four-year moving averages for U.S. durable goods shipments and U.S. cutting-tool orders, demonstrating the relation of cutting tools to overall manufacturing activity. The values are calculated by taking the average of the most recent 12 months and plotting them over time. The February 2024 cutting-tool consumption total of $214.6 million is a 4.9% increase over the January result, and a 9.0% rise from the February 2023 result.

Cutting-tool purchases are a marker of overall manufacturing activity because those purchases reflect production across a range of manufacturing market segments served by machining operations. Data in the report summarizes purchases by companies participating in the CTMR program who comprise the majority of the U.S. market for cutting tools – whose customers are contract machine shops (job shops) and OEMs for whom cutting tools are significant consumable. Their demand for cutting tools closely matches U.S. durable goods shipments as a measure of production activity.

“After some declines in orders to end the fourth quarter of 2023, the U.S. cutting tool industry has seen rebounds in monthly orders and growth in shipments to begin the first quarter of 2024,” according to Steve Boyer, president of USCTI.

USCTI/AMT
The month-by-month direction of U.S. cutting-tool consumption, February 2020 to February 2024. For the first two months of 2024 activity, cutting-tool consumption totaled $419.1 million, or 6.5% higher than the January-February 2023 total.
The month-by-month direction of U.S. cutting-tool consumption, February 2020 to February 2024. For the first two months of 2024 activity, cutting-tool consumption totaled $419.1 million, or 6.5% higher than the January-February 2023 total.

“Inflation continues to add some apprehension for upcoming quarters, but the industry continues to positively show growth even if that pattern is of uneven growth,” Boyer added.

Everede Tools Co. president Bret Tayne noted that the February increase in cutting-tool sales happened against a backdrop of “unease and uncertainty in the general economy”.

“The yield curve remains inverted, and inflation remains stubbornly high,” he noted. “The commercial aircraft sector is in a challenging period. Automobile manufacturers have become increasingly concerned about the direction of the EV market. Elections are approaching, and consumer sentiment is volatile.

“It will be interesting to see if the cutting tool industry can maintain momentum over the next several months,” according to Tayne, suggesting some uncertainty of his own.