Machine Tool Unit Sales Up 100% in November


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According to USMTC, machine tool sales in November were 99.8% (units) and 93.8% (real dollars) more than in November 2009. This marks the third straight month where month over month growth in unit sales has been virtually 100%. The exceptional rate of growth is because of the strong growth in durable goods industrial production that has pushed machine tool sales to the lower end of the normal band for a normal economy (not that the current economy is in any way normal). I expected to see strong sales at IMTS, but I did not expect sales in the months following IMTS to be even higher. While they are coming off of a low base, machine tool sales are growing faster than at any time since at least World War II. However, with the November data we may have seen the first sign that machine tool sales are nearing their peak. What’s that sign? The one-month rate of change for the average price of a machine (per USMTC) peaked in April 2010 and contracted in November 2010 – the first time it has contracted since October 2009. This isn’t a guarantee but a trend worth watching. Another trend worth watching is the correlation between the MBI’s planned capital expenditures and actual capital expenditures according to USMTC (see the chart here). There’s quite a correlation between the two. Recently, the MBI has shown that spending plans have slowed a little and now level off. Look for actual machine tool sales to do the same. For more trends affecting machine tool sales, go here.