Machine Tool Market Remains Strong, But Growth is Slow
According to the USMTO, machine tool sales in June were 2,180 units and $394,200,000 in real dollars. Unit sales in June were 1.4% higher than they were one year ago. After contracting the first two months of the year, unit machine tool orders have grown three of the last four months when compared to one year ago. Although, the month-over-month rate of growth in June was the slowest since August 2012. With machine tool orders above 2,000 units for four straight months, the market is relatively strong, but the rate of growth is pretty weak. Annually, machine tool unit sales have grown for four straight months, but the growth rate is quite modest. For the month, my unit sales forecast was too high by 4.4%. Year to date, my revised 2014 forecast, which was created in mid-February, is too high by 6.3%. My original forecast, which was created in Septemberm 2013, is too low by just 1.1%. The difference between these two forecasts was mostly in the first five months of the year. So, it would seem that based on the data so far this year that my forecast should be reasonably accurate for the remainder of the year. My unit forecast says unit sales will end 2014 0.2% lower than 2013.
Real dollar sales contracted 3.4% in June compared to one year ago. Real dollar sales have contracted two months in a row and four of the first six months of 2014. While unit sales have grown very slightly on an annual basis, real dollar sales continue to contract on annual basis. In fact, real dollar sales have contracted at an accelerating rate the last to months. The annual rate of change in real dollar sales is contracting at its fastest rate of 2014.
Most of the leading indicators for machine tool sales continue to be positive or neutral for future orders. However, since last month, the annual rate of change in money supply and real capital goods new orders have started growing at a decelerating rate. The money supply should continue growing at a decelerating rate for some time as the Fed reduces its money printing.
The industry should see accelerating growth in machine tool unit sales through IMTS. Then, unit sales are likely to see slower growth for the remainder of the year
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