The slowdown in U.S. demand for Machinery

Recent data relating to US foreign trade (available in ExportPlanning in the US Trade datamart) document the significant slowdown in US demand for investments in machinery¹ which occurred in the third quarter of the year and measured in dollars : in the period July-September 2022, in fact, the pre-estimates StudiaBo-ExportPlanning attest to a sharp slowdown of the pace of development - up to that moment particularly dynamic - of imports in dollars of the US market of machinery.

As the graph above shows, the slowdown that took place in the third quarter of the year is particularly significant: from the + 13.1% trend in dollar values in the second quarter of the year, in the most recent quarter the pace of growth of imports USA of Instrumental Mechanics fell, in fact, to 3%.
However, demand conditions appeara much less penalizing, if measured in terms of euro²: in the most recent quarter, US imports of the sector expressed in euro, albeit significantly slowing compared to in previous quarters, they recorded growth close to 18 percentage points.

In the period January-September 2022 the US market, however, grew by about 13 percentage points in $

Thanks to the good performances of the first two quarters, however, in the first 9 months of 2022, US imports of machinery showed a cumulative year-over-year increase of 12.6 percentage points in dollar values compared to the corresponding period of 2021, for a value of over 3 billion dollars; this performance is even equal to + 26.7% (+5.7 billion) in values denominated in euros.

However, US market growth is "patchy" at sector level

Despite a general slowdown in almost all the main sectors of the machinery industry³, particularly dynamic sectors on the US market in the first 9 months of the year: imports of Semiconductor manufacturing machines (+51.7 percent in dollar values; + 70.5% in euro values) and Metalworking machine tools (+21.5% in $; +36.8% in €) - together with the aggregate other special purpose machinery - made the most significant contributions to the growth in demand for machinery on the US market in the period January-September 2022.

Overall positive trends also affected US imports of Food machinery (+7.4% in cumulative y-o-y values in dollars; +21.1% in euro values), Machine tools for hard materials (+7.8% in $; +21.4% in €), Printing machines (+5.8% in $; +19.1% in €) and Extrusion machinery (+0.6% in $; +12.9% in €).

U.S. Market: Imports of Machinery
(cumulative year-over-year trends in dollars)

Source: ExportPlanning (US Trade Datamart)

Negative contributions to the development of US demand for machinery in dollar values affected Paper-making machinery (-20.9% in the cumulative trend values in dollars; -11.3% in euro values), Machines for metal processing (-21.4% in $; -11.5% in €) and, in smaller size, Packaging machines (-5.1% in $, but +6.8% in €) and Textile machinery (-3.2% in $, but +8.7% in €).

Conclusions

The most recent data on US foreign trade attest to the significant slowdown in the cycle of investments in machinery in the US market. This phenomenon appears particularly penalizing in the values denominated in dollars.
Given the simultaneous significant devaluation of the euro against the dollar (close to 15 percentage points in the most recent quarter), the effects of the slowdown in US demand on the income statements of European exporters of machinery are, however, certainly less relevant . Consider, for example, that in the most recent quarter the values in euro of EU exports of machinery on the US market showed a y-o-y growth of +9.8%, which is a stable pace compared to previous quarter.
The devaluation of the Single Currency against the greenback tends, therefore, to constitute, in the current economic phase, an element of competitiveness and support for turnover denominated in euro for European companies in the machinery industry.