Machine Tool Sales Contract Three out of Four Months
According to the USMTO, machine tool sales in August were 2,026 units and $345,992,000 in real dollars. Units sales have been above 2,000 units, which is typical of relatively strong machine tool market, five of the last six months. However, unit sales in August were down 5.1% from August 2013. This was the third time in four months that the one-month rate of change has contracted. The annual rate of change in unit orders contracted marginally, at a rate of 0.1%, for the first time since February. I do expect the annual rate of change to grow next month after orders are reported from IMTS. And, I expect unit sales to end the year slightly positive, about 2.5% ahead of 2013. In August, my original unit forecast (created in September 2013) was too high by 13.5%. Year to date, my forecast is too high by just 1.1%, which would be my most accurate forecast if the year were to end this way.
Real dollar sales contracted 7.1% in August. This was the fourth month in a row that the month-over-month change in dollar orders contracted. And, each of those months, compared to one year ago dollar sales performed worse than unit sales. The annual rate of change in dollar orders continues to contract. However, dollar sales are contracting at their slowest rate (3.0%) since January 2013. I expect dollar sales to start growing after the results from September are released.
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. The chart below shows my forecast for durable goods capacity utilization and machine tool unit orders for the remainder of 2014 and 2015.
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