Machine Tool Orders Remain Robust

 

According to USMTO, machine tool orders in April 2012 were 2,066 units and $469,653,000. Unit sales have been above 2,000 machines 10 out of the last 14 months. While unit sales contracted in March compared to one year ago, unit sales in April were up 6.4 percent compared to April 2011. However, dollar sales contracted for the second month in a row compared to the same months a year ago. This means the average machine price contracted for the first time since November 2010 and the second time since October 2009. Typically, contracting prices occur before a contraction in unit sales. This is a confirming indicator that the machine tool market is indeed beginning to slow down.

 

Two of the most important leading indicators for machine tool sales are exchange rates and industrial production. Against all currencies, the dollar continues to gain value. The one-month rate of change is growing at the fastest rate since July 2009. Although the annual rate of change is still contracting, it is doing so more slowly. The same is true for the dollar compared to the major currencies of the world. This trend in the dollar typically points to slower machine tool sales. However, industrial production is trending the other direction. The one-month rate of change for industrial production has grown more than 8.0 percent each of the last four months. The annual rate of change has grown has grown faster for six straight months. This is a good indication that machine tools will either stay strong or grow faster in the next year or so.