Orders for U.S. Machine Tools Surge in Month

Orders for U.S. machine tools, aided by a jump in domestic demand, rose in May to their highest level in more than seven years, the industry’s trade association said Sunday.

Orders in the month totaled $324.8 million. Domestic orders, which posted declines in the three previous months, rose 44.2% in May from the April level to $279 million, the National Machine Tool Builders’ Assn. said.

“American manufacturing is making a comeback,” said James Gray, president of the association.

“U.S. manufacturers are upgrading their plants, becoming more efficient and more cost-competitive. And they are buying American products to do it,” he added.

The industry group said foreign orders of American-made machine tools fell 23.1% in May to $45.8 million after rising a sharp 83.8% in April.

Economists view machine tool orders as an indication of capital investment by manufacturers of durable goods, items that last at least three years such as refrigerators and automobiles. Orders often vary widely from month-to-month.

May’s 28.4% surge in machine tool orders, which pushed orders to their highest level since March, 1981, followed a slight 0.6% decline in April to $253 million, the association said.

Machine tool orders in March, 1981, were $349.5 million.

The highest one-month total was posted in October, 1979, when $565.05 million in orders were placed.

U.S. durable goods manufacturers are planning to boost capital investment spending by a healthy 9.5% this year, up from a 2.6% increase in 1987, according to the Commerce Department.

Reflecting this increase in capital spending by manufacturers, machine tool orders so far this year are up 82.6% to $1.43 billion from orders through May of 1987, the association said.

U.S. manufacturers are experiencing a boom in export sales in large part because of the lower value of the dollar.

Export orders have more than doubled so far in 1988 to $208.4 million from $99.6 million in 1987.

The drop in the dollar has also boosted domestic orders by driving up the price of foreign competitors’ machine tools in the American market.

Domestic orders are up 78.7% to $1.23 billion so far in 1988 from 1987 levels.

May orders for metal cutting tools rose 24.3% to $242.85 million, with domestic orders up 40.4% to $205.65 million offsetting a 23.8% drop in foreign orders to $37.2 million.

The other category of machine tools, metal forming, rose 42.0% in May to $81.95 million, with domestic orders up 56.1% to $73.35 million and foreign orders down 19.6% to $8.6 million, the association said.

Shipments of machine tools rose 14.2% in May to $179.7 million.