Economic News Blog
Posted by: Steven Kline, Jr. 13. May 2019

March Machine Tool Orders Back Above 2,000 Units

In March, machine tool unit orders were 2,281, pushing orders back above 2,000 units after dipping below that level in February. Typically, when orders are above 2,000 units the machine tool market is strong. While that is the case currently, the rate of change is contracting, as March’s unit orders were down 11.7% compared with one year ago. March was the fourth month of contraction in the last six months, with only the North Central-East and Northeast having had an increase in unit orders in March compared with one year ago. As a result, the annual rate of growth decelerated for the sixth consecutive month to 5.2%.

For the third month in a row, real dollar orders performed worse than unit orders. In March, real dollar orders contracted 20.8% compared with one year ago, also the fourth month of contraction in the last six months. Only the Northeast had an increase in real dollar orders in March compared with one year ago, but the increase was just 0.3%. The annual rate of growth decelerated for the sixth month in a row to 7.2%, its slowest rate since December 2017.

Industrial production and capacity utilization appeared to hit their peak rate of growth in the first quarter of 2019. Additionally, both the money supply and the GBI: Metalworking have been negative leading indicators for future machine tool orders for a number of months. It is clear that machine tool orders are in the midst of a decelerating growth phase and are likely to see an annual rate of contraction later this year.

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