Cutting Tool Orders Flat in July

According to the Cutting Tool Market Report, a joint statistical program between AMT and USCTI, real cutting tool orders were $170.0 million in July 2014. This was 0.2% less than the order total for July 2013. Since January 2013, cutting tool orders have contracted 15 out of 19 months. However, July recorded the slowest rate of contraction of any of those 15 months. The annual rate of change has fluctuated within a relatively narrow band, but the recent trend in orders indicates that the annual  rate of contraction likely will decelerate for the remainder of 2014. For July, my cutting tool forecast was too high by 2.9%. For the year, my forecast is too high by 3.9%. 

While it appears that cutting tool orders will be flat in 2014, my forecast is calling cutting tool orders to increase 5.4% in 2015. I think the peak rate of annual growth will in July and August at an annual rate of growth of 7.3%.

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, capital goods new orders, and the Gardner Business Index. Based on the limited time frame, the metalworking portion of the Gardner Business Index has potential to be a good leading indicator for cutting tool orders.