Cutting Tool Orders Improving

In October 2020, real cutting tool orders were $167.9 million, which was the highest order total since March. However, compared with one year ago, cutting tool orders contracted -23.1%. While this was the 20th consecutive month of month-over-month contraction, the rate of contraction in September and October was notably slower than it was from April to August. 

The annual rate of change contracted at an accelerating rate for the 13th month. The annual rate of contraction was 20.7%, which was the fastest rate of annual contraction since the data was made public. While the annual rate of contraction continued to accelerate, the one-month and three-month rates of change contracted at a slower rate, indicating that a bottom in the annual rate of contraction is near.

The GBI: Metalworking is a good leading indicator of cutting tool orders and leads cutting tool orders by seven to 10 months. In December, the month-over-month rate of change in the index grew for the fifth consecutive month, growing at its fastest rate since December 2017. The annual rate of contraction decelerated for the sixth straight month, indicating that the annual rate of contraction in cutting tool orders should bottom in the first quarter of 2021.

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