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:

New Feature in the Momentum Monitor Report

This month, Keybridge and the Foundation are introducing a new feature to the U.S. Equipment & Software Investment Momentum Monitor. The “Momentum Monitor Sector Matrix” is a new data visualization that provides greater detail on our short-term investment expectations for each equipment vertical, both historically and relative to other verticals. Specifically, the Sector Matrix depicts each vertical on a 2 x 2 matrix based on both Recent Momentum (x-axis) and Historical Strength (y-axis). This capability makes it a better tool than the horizontal bar chart (sometimes called the “heat map”) that traditionally accompanied these reports, as the heat map only reflects the current reading relative to the long-term average. Additional detail on how to read and interpret the new Sector Matrix can be found on page 4 of this report.

The Sector Matrix and heat map will be published concurrently in the February and March Momentum Monitor reports, as well as the first quarterly update to the 2017 Equipment Leasing & Finance U.S. Economic Outlook (which will be published in April). Beginning in May, the heat map will no longer appear in either publication.

Source: U.S. Equipment & Software Investment Momentum Monitor - May 2017

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 now 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 17% in Q1 2017 and is down 3.8% from one year ago. The Agriculture Momentum Index increased from 98.3 (revised) in April to 104.3 in May. The M1 money supply rose 2.1% in March, while the Food Commodity Price Index rose nearly 4%, its fifth consecutive increase. Overall, the Index current level and recent movement suggest that investment growth may improve over the next three to six months.
Construction Machinery
Investment in Construction Machinery rose at a 32% annual rate in Q1 2017 but remains down 8.7% year-over-year. The Construction Momentum Index increased from 91.6 (revised) in April to 93.5 in May. Housing Starts in the West fell 16% in March (partially offsetting a 46% increase the previous month), and Median Months for Sale rose by 0.2. Overall, the Index signals improved construction machinery investment growth over the next two quarters.
Materials Handling Equipment
Investment in Materials Handling Equipment increased at a 21% annual rate in Q1 2017, and is up 8.6% year-over-year. The Materials Handling Momentum Index rose from 76.8 (revised) in April to 79.5 in May. Wholesale Machinery Sales rose 2.3% in February, the largest increase since June 2016, while in April the ISM Chicago Business Barometer climbed to 58.3, well above the expansionary threshold. Overall, the Index points to potential improvement in materials handling equipment investment growth over the next three to six months.
Other Industrial Equipment
Investment in All Other Industrial Equipment rose by an 8.9% annual rate in Q1 2017 and is up 4.5% from a year ago. The Other Industrial Equipment Momentum Index declined from 101.8 (revised) in April to 97.2 in May. In April, the Dow Jones Industrials Balance fell 8.6 points to its weakest reading since February 2008, while the Fed Funds Rate rose slightly. Overall, the Index’s recent movement suggests that growth in other industrial equipment investment may be peaking and could begin to ease in the next two quarters.
Medical Equipment
Investment in Medical Equipment expanded at a 3.6% annual rate in Q1 2017 and is up 3.5% year-over-year. The Medical Equipment Momentum Index fell from 91.7 (revised) in April to 89.8 in May. Industrial Production for Medical Equipment dropped two points, but the Export Price Index for Medical Equipment inched up. Overall, the Index points to a slowdown in medical investment growth over the next three to six months.
Mining & Oilfield Machinery
Investment in Mining & Oilfield Machinery rebounded at a robust 144% annual rate in Q1 2017, but remains down 14.7% year-over-year. The Mining & Oilfield Machinery Momentum Index increased from 107.0 (revised) in April to 109.7 in May, its 11th consecutive monthly increase. The Gas Rig Count rose to 171 in April, its highest level since November 2015, while Initial Jobless Claims in North Dakota fell 19% in March. Overall, the Index continues to signal a rebound in mining & oilfield investment growth.
Aircraft
Investment in Aircraft increased at an 88% annual rate in Q1 2017 and is up 12.8% on a year-over-year basis. The Aircraft Momentum Index rose from 102.9 (revised) in April to 105.8 in March. Although Total Miles Driven fell 3.6% in February to their lowest level in a year, in April the VIX dropped to its lowest closing value in a decade. Overall, the Index points to continued improvement in aircraft investment growth over the next three to six months.
Ships & Boats
Investment in Ships & Boats rose at an annual rate of 34% in Q1 2017 and is up 10.5% year-over-year. The Ships & Boats Momentum Index held steady at 99.1 from April (revised) to May. Raw Steel Production ticked down 0.7% in April, its third straight decline, but Boat Building Employment rose 2.1% in February. Overall, the Index continues to suggest improved investment growth in ships & boats over the next three to six months.
Railroad Equipment
Investment in Railroad Equipment surged at a 116% annual rate in Q1 2017 but remains down 7.7% year-over-year. The Railroad Equipment Momentum Index increased from 108.0 (revised) in April to 112.0 in May, its strongest reading in five years. Industrial Production for Mining and Raw Steel each rose to their highest levels since 2015. Overall, the Index points to continued improvement in railroad equipment investment over the next two quarters.
Trucks
Investment in Trucks rose by a 3.1% annual rate in Q1 2017 but is down 4.2% from year-ago levels. The Trucks Momentum Index increased from 100.0 (revised) in April to 102.0 in May. In February Gas & Diesel Production fell 1.3%, its third straight monthly decline, while Inventories of Transportation declined by 1.5%. Overall, the Index continues to signal a rebound in investment growth in trucks over the next two quarters.
Computers
Investment in Computers expanded at an annual rate of 12% in Q1 2017 and is up 2.2% year-over-year. The Computers Momentum Index held steady at 99.1 from April (revised) to May. Appliance & Electronics Retail Sales continued declined in February, but Microsoft’s Market Cap rose 3.9% in April. Overall, the Index points to stable investment growth in computers over the next three to six months.
Software
Investment in Software rose by a 3.6% annual rate in Q1 2017, and is up 4.1% year-over-year. The Software Momentum Index dropped from 98.3 (revised) in April to 96.5 in May. The NFIB Small Business Optimism Index ticked down 0.6 points in March, but the ISM Chicago Business Barometer rose to 58.3. Overall, the Index’s recent movement signals little change in software investment growth over the next two quarters.
Independent, forward-looking resources for the equipment finance industry.