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: 2017 Equipment Leasing & Finance U.S. Economic Outlook

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 decreased at an annual rate of 8.2% in Q3 2016 and is down 17.7% year-over-year. The Agriculture Momentum Index rose from 93.7 (revised) in November to 96.4 in December. In October, National Average Temperature rose 1.8 degrees, while Milk Production Per Cow increased 3.5%. Overall, the Index's persistent low position suggests continued sluggishness in agricultural investment for the next three to six months.
Construction Machinery
Investment in Construction Machinery contracted at a 35.2% annual rate in Q3 2016 (the sixth straight decline), and is down 24.2% from one year ago. The Construction Momentum Index increased from 87.1 (revised) in November to 88.6 in December. In October, Housing Starts jumped 25.5%, the largest-ever monthly increase, while Mobile Home Shipments + Housing Starts also surged 23.7%. Overall, the Index points to improved construction investment growth over the next two quarters.
Materials Handling Equipment
Investment in Materials Handling Equipment increased by a 0.9% annual rate in Q3 2016, and is up 4.5% year-over-year. The Materials Handling Momentum Index fell from 76.6 in November to 75.5 in December. Economic Policy Uncertainty jumped 74 points in November (a near-doubling), while Manufacturing Employment declined. Overall, the Index suggests stable growth in materials handling investment over the next two quarters.
Other Industrial Equipment
Investment in All Other Industrial Equipment fell by a 5.1% annual rate in Q3 2016, but is up 2.2% from one year ago. The Other Industrial Equipment Momentum Index increased from 73.3 in November to 75.6 in December, its strongest reading since June 2015. Manufacturing Defense Shipments rose 0.4% in October, and the ISM Chicago Production Index increased 4.7 points in November. Overall, the Index's recent movement points to a rebound in other industrial equipment investment over the next two quarters.
Medical Equipment
Investment in Medical Equipment declined at a 1.9% annual rate in Q3 2016 but is up 2.5% year-over-year. The Medical Equipment Momentum Index slipped from 97.8 (revised) in November to 96.6 in December. Both Federal Health Outlays and Federal Medicare Outlays fell in October by 10.6% and 65.8%, respectively. Overall, the Index suggests stable growth in medical equipment investment over the next three to six months.
Mining & Oilfield Machinery
Investment in Mining & Oilfield Machinery rose at an 21.7% annual rate in Q3 2016 — its first quarter-on-quarter increase in over two years — but is down 38.3% year-over-year. The Mining & Oilfield Machinery Momentum Index decreased from 81.7 (revised) in November to 80.4 in December. Industrial Production of Natural Gas fell 4.8 points, and Mining Support Employment ticked down 0.1%, the 25th consecutive month of decline. However, the Oil Rig Count rose 27 to 477, its sixth consecutive increase. Overall, the Index points to improvement in mining & oilfield machinery investment over the next three to six months.
Aircraft
Investment in Aircraft fell 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 102.5 in November to 95.3 in December. Shipments of Non-Defense Aircraft fell 3.6% in October, while Total Miles Driven dropped 6.8% in September. Overall, the Index signals strengthening investment growth in aircraft over the next three to six months, despite this month's decline.
Ships & Boats
Investment in Ships & Boats dropped at an annual rate of 13.8% in Q3 2016 and is down 3.3% year-over-year. The Ships & Boats Momentum Index held steady at 95.5 from November (revised) to December. In October, the ISM Manufacturing Employment Index dipped 0.6 points to 52.3 (but remains above the expansionary threshold). However, the Agricultural Product Trade Balance surged 131.4%. Overall, the Index points to a rebound in ships & boats investment.
Railroad Equipment
Investment in Railroad Equipment rebounded at a 22.5% annual rate in Q3 2016 but is down 44.7% year-over-year. The Railroad Equipment Momentum Index increased from 106.5 (revised) in November to 109.4 in December, its highest level since February 2015. Coal Production rose 7.0% in October, while Machine Tool Orders surged 47.7%. Overall, the Index points to strengthening railroad equipment investment over the next two quarters.
Trucks
Investment in Trucks fell at a 19.3% annual rate in Q3 2016 and is down 5.4% from year-ago levels, its first year-over-year decline since 2009. The Trucks Momentum Index rose from 91.0 in November to 94.0 in December, its strongest reading in over a year. Light Truck Shipments rose 2.0% in October, while the ISM Manufacturing Index rose 1.3 points to 53.2 in November. Overall, the Index signals a rebound in trucks investment over the next three to six months.
Computers
Investment in Computers declined at an annual rate of 4.1% in Q3 2016, yet remains down 4.5% year-over-year. The Computers Momentum Index increased from 92.3 (revised) in November to 93.4 in December. Consumer Expectations rose 10.9% in November, the largest monthly increase since May 2013, while Computer & Electronic Industrial Production increased 1.4 points in October. Overall, the Index points to improved investment growth in computers over the next two quarters.
Software
Investment in Software rose by a 7.6% annual rate in Q3 2016, and is up 5.7% year-over-year. The Software Momentum Index slipped from 105.6 in November to 102.9 in December. The Producer Price Index for Software Publishers fell 1.8 points to 89.6 in October, while Travel Services Exports decreased 1.1%. Overall, the Index continues to signal strong investment growth in software over the next three to six months.
Independent, forward-looking research for the equipment finance industry.