Economic News Blog
Posted by: Steven Kline, Jr. 15. July 2016

Cutting Tool Order Contraction Is Slowing

Real cutting tool orders were $165.7 million in May 2016. This level of cutting tool orders was still almost 10 percent below the average level since the beginning of 2012. May's orders were just 4.3 percent below the order level of last May. This was the slowest rate of month-over-month contraction since June 2015. And, in three of the last four months, the one-month rate of change was in single digits. While this was quite an improvement over the September 2015 to January 2016 period, we will need to see some actual growth before we get too excited. However, the slower rate of contraction has been enough to perhaps indicate a trough in the annual rate of contraction. May saw the annual rate of contraction decelerate for the first time since it began contracting in October 2015. This fits with the trend in durable goods new orders, which is a good leading indicator of cutting tool orders. Durable goods new orders have contracted at a decelerating annual rate since October 2015. And, on a month-over-month basis, durable goods new orders grew three of the last four months. This would indicate that we might see some positive change in cutting tool orders in the second half of 2016.


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