The American Machine Tool Distributors' Association and the Association for Manufacturing Technology said demand fell 18.7 per cent to $533.2 million from $655.6 million in June and 18.6 per cent from $655.4 million in July 1997.

Orders in the first seven months of 1998 were estimated at $4.6 billion, down 7.7 per cent from a year earlier, the report said.

"The GM strike, a customary summer slowdown, and an interest in delaying purchases until the nation's largest manufacturing technology show account for July's decline," American Machine Tool Distributors' president Ralph Nappi said in a statement.

Nappi was referring to the International Manufacturing Technology Show, which began on Sept 9 in Chicago and ends on Wednesday.

Machine tools are used to shape metal in making everything from bicycles to aircraft. Demand for these tools can provide a leading indicator of the pace ofmanufacturing.

By region, the report said the Midwest accounted for 48 per cent of national demand in July, followed by 17 per cent in the South and 15 per cent in the Central region. The Northeast accounted for 13 per cent and the West 8 per cent, it said.

Export orders placed with US machine tool makers fell to 122 units in July from 152 in June.

The June figure for machine tool sales was revised from the previously reported $597 million.