Machine Tool Orders Contract at Slowest Rate in 2016

In June, machine tool orders were 1,742 units and $309,835,000. This put the average price for June right at the historic average. Also, based on our latest forecast, the peak rate of annual contraction in 2016 should in July at 18.8 percent. At year end, our model shows that machine tool orders will have contracted 16.1 percent in 2016 compared with 2015.

The unit order total in June was the second highest of 2016. Compared with one year ago, unit orders were down 9.6 percent in June. The month-over-month rate of change contracted for the 14th month in a row. However, this was the first time in 2016 that the month-over-month rate of change contracted less than 10 percent. The annual rate of change contracted for the 10th month in a row. The annual rate of change, now -17.8 percent, was virtually unchanged from last month. My unit order forecast for June was too low by 9.6 percent. Year-to-date my forecast is too low by 12.0 percent, mostly due to March being much better than expected.

Real dollar sales were down 11.9 percent compared with June 2015. This was the 14th consecutive month that dollar orders have contracted. Real dollar orders have contracted at a double digit rate in 11 of the last 13 months. The annual rate of change contracted for the 13th month in a row and at its fastest rate (22.4 percent) in this down turn. 

In June, the North Central-East saw unit and dollar orders increase compared with one year ago. This was likely due to the automotive industry. Unit orders increased the most (7.2 percent) in the Northeast even though dollar orders contracted slightly in the region. The Southeast had a smaller contraction in units and dollars than industry overall. The West, South Central, and North Central-West regions performed significantly worse than the market overall.

You can find more on machine tool sales and the leading indicators on our metalworking and monetary pages.