Machine Tool Orders Contract as Expected in Non-IMTS September

The rate of contraction in unit orders in September 2019 was right in line with the average and median rates of contraction for September in a non-IMTS year.

September machine tool orders were 1,980 units and $352,409,000.

Unit orders for the month contracted 30.9% compared with one year ago, marking contraction for the eighth-straight month and nine of the last 10 months. The large month-over-month contraction the last two months was expected as unit orders were affected by IMTS. In non-IMTS years, the average contraction in unit orders in September is -33.6% and the median contraction is -29.6% (excluding the two years where orders actually increased due to the industry coming out of significant contraction). So, the contraction the last two months is as expected as is the accelerating contraction in the annual rate of change, which is now -11.1%.

Dollar orders contracted 42.4% compared with one year ago, mirroring unit orders by contracting for the eighth-straight month and nine of the last 10 months. During the last six months, dollar orders  have fared worse than unit orders as month-over-month contractions have generally been faster. The annual rate of contraction in dollar orders accelerated to 15.1%, the fastest rate of contraction since August 2016.

The GBI: Metalworking has been a negative leading indicator for future machine tool orders for a number of months. If the index remains at its current level, then the rate of change in the index will not bottom out for another seven months. Therefore, it is likely that machine tool orders will contract overall in 2020. However, IMTS is taking place in September 2020, and it tends to be a turning point for machine tools. It could be the point at which the rate of contraction in machine tool orders bottoms next year.

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