Machine Tool Orders Still Strong

 

According to USMTO, machine tool orders in March 2012 were 2,304 units and $458,506,000. This is the fourth strongest month for machine tool unit sales since September 2008. However, this is the first month since the recovery began that unit sales were less than the same month one year ago. But, the one-month rate of change in unit sales for March 2012 was just slightly negative, at -5.4 percent. This isn’t a surprise though, at least to me. My forecast for machine tool unit sales in March was 2,300. The annual growth rate for unit sales is still reasonably strong at 25.7 percent, but that rate has now slowed for 10 consecutive months.

 

Two of the most important leading indicators for machine tool sales are exchange rates and industrial production. Against all currencies, the dollar has gained value in each of the last five months, and against the major currencies, the dollar has gained value in each of the last four months. Even though the annual rate of change for both is still negative, 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 three months. The annual rate of change has grown has grown faster for five straight months. This is good indication that machine tools will either stay or strong or grow faster in the next year or so.