Economic News Blog
Posted by: Steven Kline, Jr. 12. December 2014

Machine Tool Sales Contract 2 out of 3 Months

According to the USMTO, machine tool sales in October were 2,215 units and $405,013,000 in real dollars. Unit sales contracted 15.6% compared to last October. However, last October was an exceptionally strong month for machine tool sales. And, at 2,215 units, unit sales in October were still about 25% higher than the average month since the USMTO program began. The annual rate of change decelerated slightly to 4.7%. My original unit forecast in October was too high by 3.8%. For the year, my original forecast is too low by 2.2%. My revised forecast for the second half of 2014 is too high by just 0.5%.

Real dollar sales contracted 6.9% in October compared to last October. Real dollar sales have contracted five out of the last six months. However, they were above $400 million for just the third time in 2014. And, they were about 20% higher than average month since the USMTO program began. So, all in all, October was still quite a good month for real dollar sales.

For machine tool builders, the most positive note of the month was that average price increased 10.3% in October compared to one year ago. That is the fastest rate of month-over-month growth in the average price of a machine since January 2014. Also, this was the second month in a row that the average increased from one year ago. That hasn't happened since January and February of 2012. The annual rate of change in the average price of a machine was growing for the first time since August 2012. Generally, the average price of a machine starts to increase before actual machine tool orders. Therefore, this looks to be a positive sign for machine tool consumption in 2015.

My four primary leading indicators for machine tool sales (money supply, durable goods capacity utilization, Gardner Business Index, and durable goods production) are pointing to be a very strong year for the machine tool industry in 2015. 

You can find more on machine tool sales and the leading indicators on our metalworking and monetary pages.

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