Machine Tool Orders Jump in June on Domestic Demand

Orders for U.S. machine tools recovered from two straight monthly drops by rising sharply in June, reflecting an improved domestic economy but weakening foreign demand, the industry’s trade group said Sunday.

Economists said the monthly figures reported by the Assn. for Manufacturing Technology showed that companies now feel comfortable enough about the U.S. economy to invest again, but that lower exports threaten the recovery.

“Corporate profits are improving, and companies see a light at the end of the tunnel,” said Lynn Reaser, chief economist at First Interstate Bancorp. in Los Angeles.

The lower exports, however, could be an ominous sign for the U.S. economy, she said, because they substantiate other evidence of a declining appetite for U.S. goods abroad. Exports have been helping the economy climb out of recession.

The association, based in McLean, Va., said June orders for machine tools totaled $208.60 million, a 31.1% increase from the previous month and 20.6% above the June, 1991, figure. On a year-to-date basis, orders totaled $1.26 billion, an 8% increase from January-June, 1991, orders.

In May, orders plunged 27.5% from the previous month, while in April they tumbled 9.4% from March.

The association’s figures combine two categories of tools--for metal cutting and metal forming. Taken together, they represent a relatively small industry, and the monthly figures on orders can vary widely.

But many economists consider the statistics an important barometer of strength in industrial production, because machine tools are used to manufacture goods ranging from dishwashers to jumbo jets.

Albert W. Moore, the association’s president, said the upturn in machine tool orders this year has been fueled entirely by domestic demand.

“Domestic machine tool demand is unusually strong, given the economy is really not in a full-blown recovery,” Moore said.

He said, however, that export orders for machine tools have mirrored general trade figures that show a weakened foreign appetite for U.S. goods.