Cutting Tool Orders Lowest Since February
According to the Cutting Tool Market Report, a joint statistical program between AMT and USCTI, real cutting tool orders were $166.0 million in August 2014. This was 4.3% less than the order total for August 2013. While orders grew significantly in June, they have contracted month-over-month the last two months. Since January 2013, cutting tool orders have contracted 16 out of 20 months. However, the annual rate of change has decelerated to its slowest rate of contraction (3.3%) since results began to be published. For August my forecast was to high 11.5%, which made my year-to-date forecast too high by 5.0%.
While it appears that cutting tool orders will continue in their trend of decelerating contraction in 2014, my forecast is calling cutting tool orders to increase 6.4% in 2015. I think the peak rate of annual growth will be in August 2015 at an annual rate of growth of 8.3%. Also, our capital spending survey is forecasting about a 10% in cutting tool consumption in 2015. You can search the details of that survey here.
While there is not much history to work from with this report, there are a number of potential leading indicators for this data series, including durable goods production, capital goods new orders, and the Gardner Business Index. Based on the limited time frame, the metalworking portion of the Gardner Business Index has potential to be a good leading indicator for cutting tool orders.
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