Cutting Tool Orders Contract at Fastest Rate Since February

According to the Cutting Tool Market Report, a joint statistical program between AMT and USCTI, real cutting tool orders were $169.0 million in May 2014. This was 5.4% less than the order total for May 2013. This is the eighth month in a row that cutting tool orders have contracted compared to one year ago. And it is the third month in a row that the month-over-month rate of change has contracted at an accelerating rate. The annual rate of change has been contracting at a fairly constant rate since December 2013.

For May, my cutting tool forecast was too high by 9.5%. For the year, my forecast is too high by 5.4%. Based on my forecast, the month-over-month rate of change should become positive and stay that way for the remainder of the year. Therefore, the growth in monthly cutting tool orders should translate into cutting tool orders being flat compared to 2013.

While there is not much history to work from, it is likely that real capital goods new orders. Real capital goods new orders have grown at an accelerating rate for most of the last year. This indicates improvement in cutting tool orders for the remainder of 2014.