Machine Tool Unit Orders Up, Dollar Orders Down in March

In March, machine tool sales were 2,537 units and $393,547,000. Unit orders improved in March but at the expense of dollar orders. So, it seems that unit sales are being supported by cutting prices. 

The unit order total for March was about 40% above the historic average monthly unit orders. So, March was quite a strong month from that perspective. Unit orders in March were up 7.0% from one year ago. This was just the second month of month-over-month growth since IMTS. The annual rate of change was 3.0% in March, which is up from 2.6% in December. Therefore, unit sales have seen accelerating annual growth for three months. My unit forecast was much closer in March as it was too high by 4.5%. Through the first quarter my unit forecast was too high by 16.7%. Since I was pretty close in March, I'm not going to revise my forecast yet. I expect unit sales to the end year up 7.7%.

Real dollar sales were about 18% higher than the typical monthly average. However, dollar sales are going in the opposite direction of unit sales. Real dollar sales in March were down 18.9% from one year ago. They have contracted at an accelerating month-over-month rate for three straight months and have contracted four of the last five months. The annual rate of change fell to -1.1%, which was the first time dollar sales have contracted annually since August 2014. In March. my dollar forecast was too high by 33.4%. For the first quarter I was off by 24.4%. I have revised my dollar forecast, and we could be looking at a fairly flat year in 2015.

In March, the average price of a machine was a low $155,000. This was the lowest average price since May 2010. And, its significantly below the average historical price after adjusting for inflation. Compared with one year ago, the average price fell 24.2%. That was the fourth time in five months that the average price has contracted.

The West region had its second highest unit order total since October 2013. Unit orders were up 27.7% comapred with one year ago. Unit orders continued to grow on an annual basis. Real dollar sales were up 18.7% compared with one year ago. This was much better than the last two months when they contracted by more than 32% each month. Annually, dollar sales continued to contract but the rate slowed down in March.

The South Central region saw unit orders increase more than 50% compared with the first two months of 2015. However, they contracted for the fifth month in a row and in the last four months they contracted more than 22% each month. In March, annual unit orders contracted for the first time since April 2014. While unit orders were less bad, dollar sales were worse this month. Compared with one year ago, dollar sales were down 51.8%. That was the fourth month in a row of more than a 35% decline. Annually real dollar sales have contracted for two months in a row and were contracting noticeably faster than unit orders. The average price of a machine fell to a very low $145,800.

The North Central - West has seen unit orders grow at an accelerating rate month-over-month for three straight months. In March unit orders were up 17.9% compared with last March. Annually, unit orders have grown at an accelerating rate for three straight months. Real dollar sales have been very strong in this region, increasing by more than 16% each of the last three months. Annually, real dollar sales have seen accelerating growth for two straight months. This region has not had growing dollar sales since July 2012. In fact, in each month this year dollar sales have grown more than unit sales. This is the only region where the average price of machine increased every month this year.

Unit sales in the North Central - East contracted 7.0%. That was the third time in five months they have contracted. Real dollar sales contracted by 40.8% compared with one year ago. Therefore, the average price fell by 36.4%. This region had perhaps the weakest performance of the month.

The Southeast continued to be the best performing region overall. Unit sales were up 13.2% in March. They have grown seven of the last eight months. The annual rate of growth has accelerate to 9.5% from 2.2% in October 2014. However, in two of the last three months, lower prices have been required to keep unit orders up. Dollar sales fell 16.8% in March. Annually, dollar sales continue to grow, but the rate of growth has decelerated for three months.

In the Northeast, unit sales increased by 29.2% compared with one year ago. However, real dollar sales increase by just 4.0%. Annually real dollar sales have been contracting since November 2014. The average price fell by 19.5% to just $141,000.

You can find more on machine tool sales and the leading indicators on our metalworking and monetary pages.