Economic News Blog
Posted by: Steven Kline, Jr. 15. January 2013

Machine Tool Unit Sales Up 1.6% in November

According to USMTO, machine tool orders in November 2012 were 2,164 units and $348,823,000. While unit sales remained relatively strong (up 1.6% compared to November), dollar sales saw their most significant drop (down 14.8% compared to November 2011) since November 2009. Month-over-month unit sales in 2012 increased in every month except two. However, month-over-month dollars sales decreased in five of the first 11 months and four of the last five months in 2012. Therefore, the annual rate of change for unit sales has shown a faster rate of growth (currently 5.5%) than for dollar sales (currently 2.4%) the last three months. Consequently, the average price of a machine has contracted month over month for eight of the last nine months.

Our metalworking business index is one of the best leading indicators for machine tool sales. While the index shows that the metalworking industry has contracted for six consecutive months, the annual rate of change appears to have bottomed. The index appears to lead machine tool sales by about six months. This indicates that the annual rate of change in machine tool sales should bottom sometime in the first half of 2013, which is what our forecast indicates. 

Another excellent leading indicator for machine tool sales is durable goods industrial production. Even though durable goods production is near an all-time high, the annual rate of change in durable goods production has seen decelerating growth the last three months. However, the rate of growth is still well above the average rate of growth for durable goods production. So, while production may be in for a slower rate of growth, the rate of growth is still high enough that this indicator is positive for machine tool sales. 

Finally, the annual rate of change in the broad exchange rate for the U.S. dollar has grown at a decelerating rate (moving up in the chart below) the last two months. The recent data and increased money printing at the Federal Reserve indicate that the decelerating growth trend should continue. This should be a positive for machine tool sales in 2013.


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