Machine Tool Orders Contract for Third Month
In July, machine tool sales were 1,899 units and $308,491,000. Compared with one year ago, unit orders contracted 5.2 percent. This was the third month in a row that unit orders contracted, but July had the slowest rate of contraction of those three months. The annual rate of change decelerated to 0.7 percent, which was the slowest the rate of growth since August 2014. My revised forecast for the second half of the year missed by just one unit.
Real dollar sales also contracted 12.8 percent in July. This was the sixth time in seven months that real dollar orders have contracted month-over-month. In the last two months the rate of contraction has been greater than 12 percent. The annual rate of contraction accelerated to 1.8 percent, which was the fastest rate of contraction since August 2014.
Almost all leading indicators are moving in a direction that point toward a typical contraction in the machine tool market. Historically, the average machine tool contraction (based on units) is about 25 percent.
Despite the overall decline, the Southeast and Northeast regions have been quite strong in recent months. In dollars, the Southeast has grown month-over-month for three straight months. The annual rate of growth was 9.9 percent, having accelerated the last three months. Dollar orders in the Northeast have grown seven of the last eight months. They have grown more than 25 percent each of the last two months. The annual rate of growth was 11.0 percent in July, having accelerated the last three months.
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