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:

Equipment Vertical Momentum Relative to 10-Year Historical Average The chart above summarizes the current values of each of the 12 Equipment & Software Investment Momentum Indices relative to the index values for each quarter over the last 10 years. Verticals for which momentum is below the 10-year median are "decelerating," verticals for which momentum is near the 10-year median are "neutral," and verticals for which momentum is near the 10-year maximum are "accelerating." Note that the current momentum trend for each vertical may differ from the current investment volume. For example, a vertical for which the level of investment activity is low – but which is exhibiting signs of a comeback in the near future based on the momentum suggested by its leading indicators – will be labeled "accelerating" (and vice-versa).

Source: U.S. Equipment & Software Investment Momentum Monitor - January 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 9.1% in Q3 2016 and is down 17.9% from one year ago. The Agriculture Momentum Index rose from 94.5 (revised) in December to 96.4 in January. The National Average Temperature increased 3.4% in November, and Farm Machinery Inventories rose 2.0% in October, their third straight increase. However, in December the Fed Funds Rate jumped 24 basis points to 0.55. Overall, the Index suggests little change in agricultural machinery investment growth over the next three to six months.
Construction Machinery
Investment in Construction Machinery fell at a 35.2% annual rate in Q3 2016 (the sixth straight decline), and is down 24.2% year-over-year. However, the Construction Momentum Index increased from 89.9 (revised) in December to 91.3 in January, its highest level in over a year. In October, Construction Machinery Shipments rose 2.9% (its third consecutive increase) and Real Personal Consumption Expenditures ticked up 0.1% in November. Overall, the Index points to a rebound in construction machinery investment growth over the next two quarters.
Materials Handling Equipment
Investment in Materials Handling Equipment rose by a 0.8% annual rate in Q3 2016, and is up 4.5% year-over-year. The Materials Handling Momentum Index increased from 75.5 in December to 77.7 in January. The Dow Jones Industrial Balance jumped 29.5% in December, while Machinery Wholesale Sales ticked up 1.1% in October. Overall, the Index suggests stronger investment growth in materials handling equipment over the next three to six months.
Other Industrial Equipment
Investment in All Other Industrial Equipment fell by a 4.5% annual rate in Q3 2016, but is up 2.4% from a year ago. The Other Industrial Equipment Momentum Index slipped from 74.7 (revised) in December to 73.6 in January. In December, the Fed Funds Rate jumped 24 basis points to 0.55, but the ISM Chicago Price Paid Index increased 2.1%. Overall, the Index’s recent movement points to a pick-up in industrial equipment investment growth over the next three to six months.
Medical Equipment
Investment in Medical Equipment decreased at a 1.4% annual rate in Q3 2016 but is up 2.6% year-over-year. The Medical Equipment Momentum Index increased from 96.6 in December to 100.3 in January. In November, Education & Health Services Employment rose 0.2% (continuing a trend of steady increases), while New Orders of Non-Defense Capital Goods jumped 14.4% in October. Overall, the Index suggests no major change in medical investment growth over the next three to six months.
Mining & Oilfield Machinery
Investment in Mining & Oilfield Machinery rose at a 23.1% annual rate in Q3 2016 — its first quarterly increase in over two years — but remains down 38.1% year-over-year. The Mining & Oilfield Machinery Momentum Index rose from 76.4 (revised) in December to 81.7 in January, its strongest reading in 18 months. In November, Oil & Petroleum Product Imports increased 13.9%. Overall, the Index points to improved mining & oilfield investment growth over the next two quarters.
Aircraft
Investment in Aircraft dropped at a 39.5% annual rate in Q3 2016 and remains down 28.1% on a year-over-year basis. The Aircraft Momentum Index dropped from 97.7 (revised) in December to 90.5 in January. Overseas Tourism dropped 5.7%, and Shipments of Non-Defense Aircraft fell 8.2% in November. However, New Orders of Non-Defense Aircraft jumped 103.3%. Overall, the Index signals strengthening aircraft investment growth over the next three to six months, despite the recent decline.
Ships & Boats
Investment in Ships & Boats fell at an annual rate of 13.6% in Q3 2016 and is down 3.3% year-over-year. The Ships & Boats Momentum Index held steady at 94.0 from December (revised) to January. Although the ISM Manufacturing Employment Index rose 1.5% in December, this was offset by a 4.5% decline in Industrial Production of Consumer Energy Products in November. Overall, the Index suggests continued subdued investment growth in ships & boats over the next three to six months.
Railroad Equipment
Investment in Railroad Equipment rose at a 22.5% annual rate in Q3 2016 but remains down 44.6% year-over-year. The Railroad Equipment Momentum Index climbed from 106.1 (revised) in December to 107.4 in January, its highest level in two years. In November, the Unemployment Rate fell to 4.6% (its lowest level in nearly 10 years), while Machine Tool Orders jumped 47.7% in September. Overall, the Index points to a rebound in railroad equipment investment growth over the next two quarters.
Trucks
Investment in Trucks declined at a 18.9% annual rate in Q3 2016 and is down 5.3% from year-ago levels (the first year-over-year decline since 2009). The Trucks Momentum Index held steady at 93.9 from December (revised) to January. In November, Housing Starts dropped 18.7%, while Industrial Production of Non-Durable Energy Materials also fell 1.7%. Overall, the Index continues to signal an investment growth rebound in trucks over the next two quarters.
Computers
Investment in Computers fell at an annual rate of 4.2% in Q3 2016 and is down 4.5% year-over-year. The Computers Momentum Index ticked up from 89.0 (revised) in December to 90.1 in January. Computer & Electronic Industrial Production climbed 0.5%, while Appliance & Electronic Retail Sales fell 6.6% in October. Overall, the Index suggests that computers investment growth will rebound over the next three to six months.
Software
Investment in Software rose by a 6.6% annual rate in Q3 2016, and is up 5.5% year-over-year. The Software Momentum Index slipped from 107.7 (revised) in December to 106.4 in January. Travel Services Exports fell 1.1% in October, its first decline in six months. Overall, the Index’s elevated position indicates that software investment growth will continue to improve over the next three to six months, despite recent slippage in momentum.
Independent, forward-looking resources for the equipment finance industry.