Economic News Blog
Posted by: Steven Kline, Jr. 16. October 2019

Contraction in Cutting Tool Orders Accelerates

In August, cutting tool orders were $205.1 million, which was the highest level of orders since May. However, August orders contracted by 10.0% compared with one year ago, marking the sixth consecutive month of month-over-month contraction and the fastest rate of contraction since July 2016. The annual rate of growth decelerated for the seventh-straight month to 2.2%, which was the slowest rate of annual growth since June 2017. It is very likely that the annual rate of change in cutting tool orders will slide into contraction before the end of 2019.

The GBI: Metalworking is a good leading indicator of cutting tool orders. The rate of change in the Index began contracting in March and the contraction has accelerated since. In the last down turn in late 2015 and early 2016, the GBI: Metalworking contracted more than 10% year over year and so did cutting tool orders. It is likely that the GBI: Metalworking will see annual contraction of at least 10% in the next month or two. The Index is clearly indicating that the annual rate of growth in cutting tool orders will continue to decelerate, if not begin to contract, for the remainder of 2019. The GBI typically leads cutting tool orders by seven-to-10 months.

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