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Machine Tool Orders Leveling Off

With the exception of September, machine tool sales have hovered around 2,000 units since April 2011. Since 1999, this level of unit sales has indicated a strong machine tool market. So, it is no surprise that sales are starting to level off.

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According to USMTO, machine tool orders in November 2011 were 1,994 units and $372,352,000. Except for September, machine tool sales have hovered around 2,000 units since April 2011. Since 1999, this level of unit sales has indicated a strong machine tool market. So, it is no surprise that sales are starting to level off.
 
Compared to one year ago, machine tool sales are up 7.2 percent in units and 20.1 percent in real dollars. From this point on, comparisons to one year ago get more difficult. Therefore, it is possible we might start to see some months of contraction mixed in with months of growth compared to one year ago.
 
On a year-over-year basis, orders in units and real dollars are still growing at their fastest rates in at least the last 40 years (as seen in the chart). However, the annual rate of change for both units and dollars has shown slower growth each of the last five months. The dotted line represents my forecast for the annual rate of growth for 2012.
 
Two of the most important leading indicators for machine tool sales are exchange rates and industrial production. Against all currencies, the dollar is at its highest level since September 2010. The one-month rate of change has grown each of the last three months, and the annual rate of change is contracting more slowly. This will put downward pressure on machine tool sales. However, consumer durable goods industrial production is still at a strong level. One-month rates of change are still significantly positive and annual rates of change have grown faster each of the last three months. With industrial production so strong, it is putting upward pressure on machine tool sales. These countervailing forces are most likely why sales are starting to level off.
 

For more information on machine tool sales and leading indicators, go here