Reports from the Bureau of Labor Statistics showed that January 2020 was a rough one for manufacturers: Despite the overall economy growing by 225,000 jobs, manufacturing as a sector lost 12,000, and productivity fell. Now, the Association for Manufacturing Technology says that hurt hit manufacturing technology as well. A new report from AMT says manufacturing technology orders fell 32% in January.
U.S. orders of manufacturing tech fell to $269 million in January 2020, 32% worse than in December and 34% worse than in January 2019. It’s also the lowest amount in orders since January 2017. According to Douglas K. Woods, president of AMT, the downturn itself wasn't surprising.
“Based on our economic forecasts, we projected that the beginning of 2020 was going to be challenging for manufacturers, and indications were that growth would resume mid-year,” he said in a statement. But those forecasts didn't account for a novel viral outbreak in China. “It now appears that the coronavirus will likely impact a turnaround in manufacturing technology on several fronts,” said Woods. Global travel and Asian supply chains will be disrupted, Woods predicted, and buyers would delay purchasing decisions until the outbreak passes.
Woods expressed optimism that the economic impact would not last too long, though. “In previous outbreaks such as SARS and MERS, the economic downturn lasted several months, and economies quickly rebounded after the threat subsided and demand returned. We would expect a similar scenario in this case as well,” he said.
Following that, Woods prognosticates a strong recovery: “One bright spot in economic news is that the PMI index was back up in January, moving past 50, and indicating that the market will expand,” he said. The Institute for Supply Management reported February 3 that the manufacturing PMI increased to 50.9% in January from 47.8% in December. On March 2, the ISM reported that index had fallen, but remained positive at 50.1%. Woods also cited improved consumer sentiment and housing starts in January as signs the underlying U.S. economy was strong.