Momentum Monitor

Foundation-Keybridge Equipment & Software Investment Momentum Monitor

The Foundation-Keybridge U.S. Equipment & Software Investment Momentum Monitor consists of indices for 12 equipment and software investment verticals. These indices are designed to identify turning points in their respective investment cycles with a 3 to 6 month lead time for the following verticals:

Source: 2017 Equipment Leasing & Finance U.S. Economic Outlook: Q3 Update

The U.S. Equipment and Investment Software Momentum Monitor is published every month but every third month it is included in the quarterly updates to the U.S. Economic Outlook. The Momentum Monitor is available to download free of charge.

Vertical Markets

Business leaders require actionable forward-looking intelligence to make strategic decisions. The Foundation-Keybridge U.S. Equipment & Software Investment Momentum Monitor consists of indices for 12 equipment and software verticals . These indices identify key turning points in their respective investment cycles with a 3 to 6 months lead time. Equipment and software investment data comes from the Bureau of Economic Analysis (Nonresidential Private Fixed Investment, chained dollars) and is publicly available on BEA's website on a quarterly basis. The underlying Momentum Monitor data comes from other publicly available sources (published monthly), including BEA and the Census Bureau, and is used to calculate the Momentum Monitor indices.

Agriculture Machinery
Investment in Agricultural Machinery contracted at an annual rate of 13% in Q1 2017 and is down 2.7% from one year ago. The Agriculture Momentum Index increased from 100.0 (revised) in June to 101.8 in July. The M1 money supply surged 2.2%, but the National Average Temperature dropped 2.1 degrees Fahrenheit in May. Overall, the Index’s recent movement suggests modest year-over-year growth in agricultural machinery investment over the next three to six months.
Construction Machinery
Investment in Construction Machinery expanded at a 15% annual rate in Q1 2017 (its first increase in more than two years), but is down nearly 12% year-over-year. The Construction Momentum Index held steady at 89.9 from June (revised) to July. Median Months for Sale dropped by 0.6, while Mobile Home Shipments declined by 3.2%. Overall, the Index continues to signal improved year-over-year investment growth in construction machinery over the next three to six months.
Materials Handling Equipment
Investment in Materials Handling Equipment rose by an 18% annual rate in Q1 2017, and is up 7.9% year-over-year. The Materials Handling Momentum Index increased from 85.3 (revised) in June to 87.2 in July. The ISM Chicago Business Barometer surged nearly 11% in May, while Materials Handling Import Prices held steady after a large drop in April. Overall, the Index points to an uptick in materials handling investment over the next two quarters.
Other Industrial Equipment
Investment in All Other Industrial Equipment increased by a 2.3% annual rate in Q1 2017 and is up 2.9% from a year ago. The Other Industrial Equipment Momentum Index dipped from 99.1 in June to 98.2 in July. M1 surged 2.2%, but was offset by a 25 basis point increase in the Federal Funds Rate in June. Overall, the Index points to continued slow growth in industrial equipment investment over the next three to six months.
Medical Equipment
Investment in Medical Equipment expanded at a 5.5% annual rate in Q1 2017 and is up 4.0% year-over-year. The Medical Equipment Momentum Index fell from 89.7 (revised) in June to 86.0 in July. CPI Medical: Physicians’ Services fell significantly and is below year-ago levels, while Industrial Production: Medical Equipment also fell by 2.3%. Overall, the Index’s position and recent movement strongly suggest a pending slowdown in medical equipment investment over the next three to six months.
Mining & Oilfield Machinery
Investment in Mining & Oilfield Machinery surged at an 181% annual rate in Q1 2017, but remains down 12% year-over-year. The Mining & Oilfield Machinery Momentum Index rose from 112.1 (revised) in June to 113.0 in July, its highest level in seven years. The Gas Rig Count increased by two to 184 in June, its 11th straight monthly increase. However, Jobless Claims in North Dakota rose 60% in May. Overall, the Index points to a sustained rebound in mining & oilfield machinery investment over the next two quarters.
Aircraft
Investment in Aircraft rebounded at a 103% annual pace in Q1 2017 and is up 15% year-over-year. The Aircraft Momentum Index ticked up from 101.9 (revised) in June to 102.9 in July. Exports of Civilian Aircraft rose 13%, while Shipments of Non-Defense Aircraft increased 4.9%. Overall, the Index is showing signs of peaking, pointing to a potential moderation in aircraft investment growth over the next three to six months.
Ships & Boats
Investment in Ships & Boats rose at an annual rate of 6.8% in Q1 2017 and is up 4.5% year-over-year. The Ships & Boats Momentum Index increased from 106.7 (revised) in June to 107.7 in July. A 21% drop in Raw Steel Production was outweighed by a 3.5% increase in Shipments of Ships & Boats. Overall, the Index suggests that ships & boats investment growth should continue to strengthen over the next two quarters.
Railroad Equipment
Investment in Railroad Equipment expanded at a 49% annual rate in Q1 2017 but remains down 16% year-over-year. The Railroad Equipment Momentum Index jumped from 108.0 (revised) in June to 112.0 in July. Petroleum Carloads dropped 21% in June, while Capacity Utilization for Oil & Gas Extraction rose 1.3 percentage points to 97.7%. Overall, the Index points to a strong rebound in railroad equipment investment over the next three to six months.
Trucks
Investment in Trucks expanded at a 3.7% annual rate in Q1 2017 but is down 4.1% from year-ago levels. The Trucks Momentum Index rose from 102.0 in June to 104.0 in July. Gas & Diesel Production increased 8.9% in April, while the ISM Manufacturing Index rose 2.9 points to 57.8 in June, its tenth consecutive month above the expansionary threshold. Overall, the Index points to a resurgence in trucking investment over the next three to six months.
Computers
Investment in Computers increased at a 17% annual pace in Q1 2017, and is up 3.3% year-over-year. The Computers Momentum Index increased from 100.0 (revised) in June to 101.8 in July. In May, Industrial Production for Computer & Peripheral Equipment rose 3.2%. Overall, the Index’s recent movement suggests that growth in computers investment should continue to improve over the next two quarters.
Software
Investment in Software rose by a 6.2% annual rate in Q1 2017, and is up 4.5% year-over-year. The Software Momentum decreased from 97.4 (revised) in June to 96.5 in July. The ISM Chicago Business Barometer rose 11% in June, its fifth straight monthly increase, but the NFIB Small Business Optimism Index ticked down 0.2 points in April and was flat in May. Overall, the Index suggests little change in software investment growth over the next three to six months.
Independent, forward-looking resources for the equipment finance industry.