Cutting Tool Orders Contract at Slower Rate

Real cutting tool orders were $173.4 million in February 2016. This was the highest level for cutting tool orders since October 2015. The order total in February was 4.4 percent less than one year ago. That was the slowest rate of month-ove-rmonth contraction since June 2015. The rate of contraction was more than 11.8 percent the previous five months. The annual rate of change contracted at an accelerating rate for the fifth month in a row. While there is not much history to work from with this report, there are a number of potential leading indicators for this data series, including durable goods production, durable goods new orders, and the Gardner Business Index. Durable goods new orders have contracted significantly, which has likely led to the contraction in cutting tool orders. However, there are some positive signs in recent new order data, particularly in automotive and aerospace. Also, while it is still contracting, the Gardner Business Index has improved the last four months.