Machine Tool Units Sales Increase 7.0% in March 2014
According to the USMTO, machine tool sales in March were 2,375 units and $481,399,000 in real dollars. This was the most units sold since December 2013 and the most real dollars sold since September 2012 (and the most real dollars sold since December 2011 if we disregard the IMTS affect).
Unit sales in March were 7.0% higher than they were one year ago. This is the first month-over-month increase since December 2013, but it is the fourth time in the last six month that the month-over-month rate of change was positive. After two months of contraction, the annual rate of change showed machine tool sales increased the last 12 months. But, the annual rate of change has been fluctuating around zero since February 2013. For the month my unit sales forecast was too low by just 25 units, or 1.1%. Therefore, my unit forecast was too high by 7.6% for the first quarter of 2014. However, each month my monthly forecast has gotten more accurate. Therefore, I still think unit sales will end 2014 up about 1%.
In absolute terms, real dollar sales were very strong in March. Although, compared to one year ago real dollar sales were up just 1.2%. But, the month-over-month rate of change has been positive in four of the last five months. Therefore, the annual rate of change continues to show a decelerating contraction in real dollar sales. The annual rate of change improved to -3.8% this month from -10.3% in October 2013. Our annual Capital Spending Survey (completed in August 2013) called for machine tool consumption to increase 16% in 2014. Because of the lead time of orders to consumption, the order data is now seven months into 2014. Based on USMTO, real dollar oders of machine tools will be about $5 billion. From 2011-2013, USMTO orders from September to August (to account for the roughly four month lag in consumption compared to orders) has account for 74% of actual consumption. Therefore, based on USMTO orders, real machine tool consumption in 2014 should be around $6.8 billion. This would be a 6% increase over 2013.
The average price of a machine in real dollars has been above $200,000 two of the last three months. This is the first time that has happened since the summer of 2012.
The leading indicators for machine tool sales continue to be positive or neutral for future orders. Therefore, the industry should see accelerating growth in machine tool sales for the next couple of quarters.
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