Machine Tools - Average Price Improves but Growth Slows

May machine tool orders showed notable improvement over the last three to six months in the average price of a machine, but unit and dollar orders contracted compared with one year ago.

May machine tool orders showed notable improvement over the last three to six months in the average price of a machine, but unit and dollar orders contracted compared with one year ago.

In May, machine tool unit orders were 1,884, which put orders below 2,000 units for the second time in four months. Also, this was the lowest level of unit orders since July 2017. The 2,000-unit order level is typically the demarcation line between a strong or weak machine tool market. May’s month-over-month rate of change contracted 25.5%, which was the fourth-straight month of contraction and the fifth in the last six months. Also, this was the fastest rate of contraction since July 2016. As a result, the annual rate of growth decelerated for the eighth consecutive month to 0.3%, which was the slowest rate of annual growth since March 2017, which was the last time the annual rate of change contracted.

Real dollar orders contracted at a double digit rate for the fourth month in a row and performed worse than unit orders for the fifth straight month. In May, real dollar orders contracted 27.3% compared with one year ago. The annual rate of growth decelerated for the eighth month in a row to 0.2%, its slowest rate since March 2017.

Industrial production and capacity utilization both recorded decelerating growth for the fourth consecutive month in May. Additionally, both the money supply and the GBI: Metalworking have been negative leading indicators for future machine tool orders for a number of months. On the positive side, the change in the real 10-year Treasury rate has moved in a positive direction for capital equipment for several months. It is likely that machine tool orders will see an annual rate of contraction next month.

Reports

Top Shops

‘Top Shops’ is a benchmarking and recognition program designed to help shops build their business.

World Machine Tool Survey

An independent annual survey that collects statistics from machine tool consuming and producing countries and compares them in real U.S. dollars.

Capital Spending Survey

An annual survey that collects statistics regarding budgeted spending on machine tools, testing equipment, software and more.

Gardner Business Index

A diffusion index measuring month-to-month changes in activity at durable goods and discrete parts manufacturing facilities.