Machine Tool Unit Sales Down 5.3% in February
According to USMTO, machine tool sales in February were 1,907 units and $343,838,000 in real dollars. Unit sales in February were 5.3% lower than they were last February. After orders grew at a strong rate every month of the fourth quarter of 2013, the month-over-month rate of change has contracted the first two months of 2014. The rate of contraction was slower in February than it was in January though. The annual rate of change for unit sales continues to hover around zero as it has done since February 2013.
My unit sales forecast, which I revised upward two months ago as a result of the strong fourth quarter, was too high by 8.8%. It turns out that my original forecast for February was just 2.3% too high. I think 2014 started slow due to the strong end to 2013 that was likely the result of the end of bonus depreciation. My forecast adjustment from two months ago mostly affected the first five months of the year, particularly April and May. Unless unit sales pick up in those months, my forecast will be significantly too high in those two months.
Real dollar sales contracted at a similar as unit sales, falling 5.6% compared to last February. This was after three consecutive months of month-over-month growth in real dollar sales. Despite the contraction in monthly sales in February, the annual rate of change in dollar sales continues to improve. It has contracted at a slower rate each of the last for months. Dollar sales are contracting at their slowest rate since January 2013.
In February, the average price of a machine was $180,000, which was down from an upwardly revised $210,000 in January. Compared to last February, the average price of a machine was virtually flat. The average price this month was similar to the average price in November and December of last year. On an annual basis, continues to contract at a slower rate. It is contracting at its slowest rate since October 2012. This tends to be a positive signal for future machine tool sales.
Annually, the money supply continues to grow at a very significant rate. And, backlogs at durable goods manufacturers have expanded for the second time in three months. The trend in backlogs indicates that capacity utilization should increse significantly in 2014. These two trends indicate that machine tool sales see significant month-over-month growth very soon.
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