Machine Tool Orders Pick Up at Year End

Machine tool orders in December 2011 reached its second highest in regards to number of units and real dollars sold since March 2008.


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According to USMTO, machine tool orders in December 2011 were 2,510 units and $482,366,000. This is the second-highest number of units and real dollars sold since March 2008 (only September 2011 was higher).
Compared to one year ago, machine tool sales are up 18.3 percent in units and 16.4 percent in real dollars. While the one-month rate of change for unit sales had slowed from January to October, it has shown faster growth each of the last two months. Also, this is the first time that one-month rate of change for units has grown faster than the one-month rate of change for real dollars since November 2010.
Because units sales grew faster than dollar sales, the average price of a machine fell in December for only the second time since October 2009. Since backlogs for machines are approaching a year in some cases, it seems unlikely that the price decline was supply and demand driven. Rather, it seems more likely that buyers are moving down the value chain (either in terms of capability or quality) in order to get machines installed quickly to meet the needs of their growing production requirements.
On annual basis, unit sales were up 45.8 percent and real dollar sales were up 60.3 percent in 2011 compared to 2010. While the annual rate of change continues to show slower growth, the current rates of change are still historically high.
Two of the most important leading indicators for machine tool sales are exchange rates and industrial production. Against all currencies, the dollar has gained in value each of the last three months (compared to one year). On an annual basis the dollar continues to contract, which is good for machine tool sales, but it is doing so more slowly. If the dollar continues to contract more slowly and eventually gain value, this will lead to slower 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 four months. With industrial production so strong, it is putting upward pressure on machine tool sales.

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