According to USMTO, machine tool orders in July 2012 were 1,849 units and $374,323,000. July broke the string of five consecutive months of more than 2,000 units ordered. Also, July 2012 orders were 1.5 percent lower than orders in July 2011. This is just the second time since December 2009 that month over month orders contracted. Compared to the same month one year ago, dollar sales contracted more significantly than unit sales. Also, dollar sales have contracted three of the last five months. Therefore, the annual rates of change for units and dollars are much closer than they have been since late 2010. One reason that unit sales are holding up better than dollar sales is that the U.S. machine tool market is perhaps the strongest in the world at the moment (and this looks to continue to be the case in 2013). The U.S. market is forecast to see continued growth in 2013 while most other markets around the world will see much slower growth or contraction. So, builders are competing harder for sales in the U.S., which is taking away some pricing power from machine tool builders.
The annual rate of change for machine tool sales continues to grow more slowly. This is expected and the trend should continue until early 2013, according to our forecast. Based on Gardner’s Capital Spending Survey, spending on machine tools should remain strong in 2013, increasing 8-15 percent. According to the survey, current capacity utilization is 80.1 percent which is the highest since 1999. Also, capacity utilization has increased significantly since 2009 when it was just 61 percent. The historically high level and rapid rate of growth in capacity utilization will keep machine tool sales strong throughout 2013. Also, industrial production continues to grow at an accelerating rate, which is another sign that machine tool sales should be strong in 2013. While the dollar continues to gain against other currencies, which points to slower machine tool sales, the recent announcement of more QE by the Federal Reserve should help bring the value of the dollar down relative to other currencies. This could provide further support to machine tool sales in 2013.
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