Cutting Tool Orders Contract 8.0% in February

According to the Cutting Tool Market Report, a joint statistical program between AMT and USCTI, cutting tool orders were $157.0 million in February 2014. This was 8.0% less than the order total for February 2013. This is the fifth month in a row that cutting tool orders have contracted compared to one year ago. However, the rate of contraction in February was less than it was in January. The annual rate of change also was slower in February compared to January.

Earlier this year I forecasted cutting tool orders. My forecast calls for cutting tool orders to increase by 1.7% at the end of 2014. February 2014 was the first month I forecasted. My estimate for February was too high by 3.8%.

There are a number of potential leading indicators for cutting tool orders. One I think that has the most promise is the backlog index form our Metalworking Business index. We very limited data to compare, but the logic makes sense that as the backlogs of metalworkers increase they will be ordering more cutting tools in the future. If my initial forecast is correct, then it appears that the recent bottom in the rate of change in the backlog index would lead the bottom in cutting tool orders by about six months.