Machine Tool Unit Sales Down 6.3% in January

According to USMTO, machine tool sales in January were 1,830 units and $358,967,000 in real dollars. Unit sales in January were 6.3% lower than they were last January. This was just the second time in the last 12 months that orders were below 2,000 units for the month. The annual rate of change dipped to -0.1%. However, the annual rate of change should return to growth in the next month or two.

My unit sales forecast, which I revised upward last month, was too high by 14.8%. It turns out that my original forecast for January was almost exactly right as it was too high by just 1.1%. I think 2014 started slow due to the strong end to 2013 that was likely the result of the end of bonus depreciation.

While unit sales contracted in January, real dollar sales increased 4.4%. This was the third month in a row that month-over-month rate of change in dollar sales grew. The annual rate of change continues to contract at a slower rate. Annual dollar sales are contracting at their slowest rate since January 2013.

In January, the average price of a machine was $196,000. This is the highest average machine price since March 2013 and the second highest since August 2012. In two of the last three months, the average price of a machine has increased by more than 10% compared to the same month one year ago. As supply and demand of machine tools continue to equilibrate the dollar sales should continue to perform better than unit sales in 2014.

Annually, the money supply continues to grow at a very significant rate. And, backlogs at durable goods manufacturers are growing for the first time since June 2011. This indicates that capacity utilization should increase in 2014. These trends indicate that machine tool sales should increase in 2014.

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