WASHINGTON, Feb 8 (Reuters) - U.S. machine tool demand plunged to its lowest annual level in 2003, but two industry trade groups said on Sunday that demand for manufacturing equipment had begun to improve after a multi-year slump.
The American Machine Tool Distributors' Association (AMTDA) and the Association for Manufacturing Technology (AMT) said U.S. tool demand in 2003 eased to $1.993 billion, down from $2.164 billion in 2002.
Machine tool sales have plunged 64 percent from a spike of $5.471 billion in 1997 as competition overseas and a glut of capacity leftover from the go-go days of the 1990s reduced consumption for U.S. manufacturing equipment.
The trade groups said the December figures showed the industry is poised to rebound in 2004. In December, tool purchases rose 15.4 percent to $220.88 million from $191.43 million in November.
December orders also were up 10.8 percent from $199.43 million in the same month a year ago.
"Manufacturing technology orders finished strong in the fourth quarter last year," John Byrd, president of the Association for Manufacturing Technology, said in a statement.
"Our customers' capacity use and profits are growing, a combination that has historically signaled previous recoveries in capital spending."
Last week, the Commerce Department said orders of U.S. manufactured goods rose in December in a better-than-expected report on the health of the troubled factory sector.
Orders were helped by a 2.0 percent rise in demand for non-durable goods, while orders for expensive durable goods -- items designed to last three years or more -- climbed a revised 0.3 percent.
A 3.5 percent increase in demand for machinery and a 1.9 percent rise in transportation equipment orders also contributed to the increase.
Machine tools are used to shape metal for such products as car engines, refrigerators and television sets. Demand for these tools can provide a leading indicator of the pace of manufacturing.
Machine tool demand for December rose in the Northeast, South, Midwest and Western regions of the United States. The Central part of the country reported the only decline among the five major regions surveyed by the trade groups.
The machine tools report is generally based on a survey of about 200 manufacturers, distributors and importers of machine tools that represent 76 percent of the machine tool market.