Machine Tool Sales Contract First Time Since February

According to the USMTO, machine tool sales in May were 2,057 units and $345,174,000 in real dollars. Unit sales in May were 7.8% lower than they were one year ago. This is the first month-over-month contraction since February, but it is the third time this year machine tool unit sales have contracted month-over-month. Annually, machine tool unit sales have grown for three straight months, but the growth rate is quite modest. At the same time, sales were above 2,000 units for the third straight month, which indicates a relatively healthy market for machine tools. For the month, my unit sales forecast was too high by 19.1%. This was my worst month of the year. Year to date, my forecast is too high by 6.7%. My original forecast is too low by just 1.6%. The difference between these two forecasts was mostly in the first five months of the year. So, it would seem that based on the data so far this year that my forecast should be reasonably accurate for the remainder of the year. My unit forecast says we will end 2014 0.2% higher than 2013.
Real dollar sales contracted 17.8% in May compared to one year ago. Again, this is the first month of month-over-month contraction since February. It’s only the second month of contraction since October 2013. But, the rate of contraction was pretty significant as it was the second fastest rate of month-over-month contraction in real dollar sales since October 2009. So, while machines are still being sold, it appears that either significant discounts are being to move machines or buyers or buying machine or lower capability or technology.
Most of the leading indicators for machine tool sales continue to be positive or neutral for future orders. Therefore, the industry should see accelerating growth in machine tool sales through IMTS. However, housing permits continue to see significantly slower growth and money supply growth appears to have peaked.