A Winter Nap Before Spring Growth for Manufacturing Technology Orders
The market for manufacturing technology may have you on the edge of your seat, but don’t worry the industry is just taking a winter’s nap and will be back up in spring.
The October 2015 Orders Report for manufacturing technology showed orders were 17.4 percent lower as compared with the first 10 months of 2014, an unexpected drop. However, the rest of the economy is preforming well. Significant growth in consumer spending, services, and capital investment have helped add weight to the economy.
We have seen some challenges with commodity prices, which have increased expenditures but also put the pressure on the profits that they generate. We all know lack of profits means lack of money to invest. I recently attended an economic symposium by the Federal Reserve Bank, which predicts 2015 will show a 2.4 percent growth in GDP over 2014.
We have had similar numbers in the past, which have usually indicated good business for everyone including the manufacturing technology industry. But that does not appear to be the condition right now. As we go into 2016 the Federal Reserve is looking for the number to grow modestly and just enough that we should see manufacturing technology orders rise in late spring and early summer.
What’s generating all this?
According to the latest Jobs report, 211,000 more jobs were created. Unfortunately, manufacturing jobs fell by 1000 units in November, though not a surprise to anyone in our industry as this is typical for this time of year as manufacturing companies try to bolster profit.
What does this mean for manufacturing as a whole?
For the next six-to-seven months we should see a little flatness in manufacturing technology, and then acceleration in the industry. By the end of 2016 manufacturing technology orders will be up.
What can we do to make sure this happens?
Contact your legislator right now as they are considering a bill on tax extenders, important for businesses needing to invest in new equipment. Enacting this legislation enables people to buy more production equipment by raising the R&D investment.