January Cutting Tool Orders Second Most Since August

January cutting tool orders were $196.5 million, which were down 9.8% compared with one year ago.

In January 2020, real cutting tool orders were $196.5 million,  which was the second highest total since August 2019. Compared with one year ago, cutting tool orders contracted -9.8%, which marked the 11th consecutive month of month-over-month contraction. The annual rate of change contracted at an accelerating rate for the fourth month. The annual rate of contraction was 5.2%, which was the fastest rate of contraction since December 2016.

The GBI: Metalworking is a good leading indicator of cutting tool orders and leads cutting tool orders by seven-to-10 months. The annual rate of change in the Index has contracted for 12 straight months, clearly indicating that the annual rate of contraction in cutting tool orders will continue to accelerate. However, the GBI rate of change does appear to be in the initial stages of a turn. If it bottoms in the first quarter of 2020, then it would be expected that the rate of change in cutting tool orders would bottom around the summer of 2020.

Of course, the above analysis is dependent on how COVID-19 affects manufacturing. Automotive OEMs have shut down, which means cutting tool orders for automotive will decrease dramatically. However, the aerospace and medical industries continue to maintain production. And, Gardner Intelligence’s COVID-19 survey indicates that as of March 20th relatively few manufacturers have adjusted their production.

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.