Machine Tool Unit Orders Flat in July
According to the USMTO, machine tool sales in July were 1,980 units and $345,599,000 in real dollars. Unit sales in July were down 0.1% from July 2013. This was the first time in four months that unit orders fell below 2,000 units. The annual rate of change in unit orders has been growing for five months, but the rate of growth has decelerated for three straight months. Since January 2013, the annual rate of change in unit orders has fluctuated in a narrow band between -2.3% and 3.7%. In July, my original unit forecast (created in September 2013) was too high by 3.5%. For the year, my original forecast for 2014 is too low by just 0.4%. I still expect unit sales to end the year in slightly positive territory.
Real dollar sales contracted 2.0% in July. This was the third month in a row that the month-over-month change in dollar orders contracted. The annual rate of change in dollar orders continues to contract. In 2014, the annual rate of contraction has been virtually flat, fluctuating between -3.0% and -4.8%. However, I think dollar sales will start to turn around the in the fourth quarter of 2014. And, I think dollar orders will end the year slightly positive as well.
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. Our capital spending survey, based on responses by actual purchasers of capital equipment, indicates that machine tool consumption will increase 37% in 2015.
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