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 - August 2016

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 increased at an annual rate of 14.2% in Q2 2016, yet remains down 11.5% from one year ago. The Agriculture Momentum Index rose from 92.7 (revised) in July to 94.5 in August. Farm Machinery Shipments rose 2.1% and the Food Export Price Index increased 2.5%, while Agricultural Equipment Sales dropped 1.1%. The Index’s low position continues to suggest weak agricultural investment growth for the next three to six months, although the Index’s recent movement is encouraging.
Construction Machinery
Investment in Construction Machinery contracted at a 7.3% annual rate in Q2 2016 (the fifth straight decline), and is down 19.7% year-over-year. However, the Construction Momentum Index ticked up from 80.0 (revised) in July to 81.4 in August. Housing Starts jumped 4.8% and Multifamily Housing Permits rose 2.5% in June, while Residential Construction lost 2,400 jobs. Overall, the Index suggests that the decline in construction investment may have bottomed out, but short-term growth is likely to remain subdued.
Materials Handling Equipment
Investment in Materials Handling Equipment rose by a 13.0% annual rate in Q2 2016, and is up 4.9% year-over-year. The Materials Handling Momentum Index held steady at 71.3 from July (revised) to August. The S&P Industrial Index rose 27 points, while Manufacturing added 14,000 jobs in June. Overall, the Index suggests no major change in materials handling investment growth over the next three to six months.
Other Industrial Equipment
Investment in All Other Industrial Equipment expanded by an 11.4% annual rate in Q2 2016, and is up 2.1% from one year ago. The Other Industrial Equipment Momentum Index rose from 60.0 in July to 63.3 in August, its highest level in 2016. Copper Warehouse Stocks increased 11.1%, and the Industrial Production Index for Machinery rose 1.1% to 92.3, an 8-month high. The Index’s overall low position suggests modest investment growth over the next two quarters, but recent movement is encouraging.
Medical Equipment
Investment in Medical Equipment increased at a 4.0% annual rate in Q2 2016 and is up 4.7% year-over-year. The Medical Equipment Momentum Index held steady at 97.8 from July (revised) to August. While New Orders of Electro-Medical Devices rose 0.4% in June and the S&P Global Healthcare Index climbed to 103.2 (its highest level this year), Shipments of Electro-Medical Devices dropped 0.3%. Overall, the Index suggests no major change in medical investment over the next three to six months.
Mining & Oilfield Machinery
Investment in Mining & Oilfield Machinery plummeted at a 76.9% annual rate in Q2 2016 (its largest decline since 2002) and is now down 51.7% year-over-year. The Mining & Oilfield Machinery Momentum Index rose from 62.8 (revised) in July to 64.2 in August, its first increase in 9 months. Natural Gas Industrial Production fell 6.9% in June and Shipments of Oil & Gas Machinery dropped 4.0% to an 11-year low. The Index continues to signal negative growth in mining & oilfield machinery investment over the next two quarters.
Aircraft
Investment in Aircraft rose at a 59.0% annual rate in Q2 2016, yet remains down 18.4% on a year-over-year basis. The Aircraft Momentum Index increased sharply from 82.0 (revised) in July to 92.9 in August. While Exports of Civilian Aircraft decreased 3.0%, Air Transportation added 800 jobs in June, continuing a rising trend. Overall, the Index points to an aircraft investment revival, though investment growth in this equipment vertical tends to be volatile.
Ships & Boats
Investment in Ships & Boats increased at an annual rate of 16.9% in Q2 2016, yet remains down 17.0% year-over-year. The Ships & Boats Momentum Index fell from 87.7 (revised) in July to 83.1 in August, its weakest reading in nearly two years. New Orders of Ships & Boats increased 5.7%, while Raw Steel Production declined 2.6%. Overall, the Index points to a continued slowdown in ships & boats investment growth over the next three to six months.
Railroad Equipment
Investment in Railroad Equipment plunged at a 65.4% annual rate in Q2 2016, its third straight decline, and is now down 39.9% year-over-year, a six-year low. However, the Railroad Equipment Momentum Index jumped from 72.7 (revised) in July to 81.1 in August. Coal Production increased 12.7%, while Petroleum Carloads dropped 4.5% in July. Overall, the Index points to a pick-up in railroad equipment investment growth over the next two quarters, but its low position suggests investment will remain modest.
Trucks
Investment in Trucks fell at a 15.0% annual rate in Q2 2016 but is up 3.1% year-over-year. The Trucks Momentum Index rose from 79.1 (revised) in July to 85.1 in August. Light Truck Shipments increased 1.6% in June following a decline the previous month, and Industrial Production for Non-Durable Energy Materials expanded 1.8%. Overall, the Index’s recent movement points to improved investment growth in trucking equipment over the next three to six months.
Computers
Investment in Computers grew at an annual rate of 11.5% in Q2 2016, yet remains down 0.7% year-over-year. The Computers Momentum Index dropped from 83.3 in July to 78.8 in August, its lowest reading since 2009. Computer & Electronics Shipments fell 6.9% to an all-time low, while Computer & Electronic Capacity Utilization also fell to a two-year low. Overall, the Index points to a slowdown in computer equipment investment growth over the next two quarters.
Software
Investment in Software rose by a 4.4% annual rate in Q2 2016, and is up 3.6% year-over-year. The Software Momentum Index fell from 100.0 (revised) in July to 97.4 in August. The ZEW Economic Sentiment Survey rose 30.0%, after falling to a two-year low in May, while the S&P 500 Software & Services Index posted an encouraging 53-point jump. Overall, the Index’s elevated position continue to suggest solid growth in software investment over the next three to six months.
Independent, forward-looking research for the equipment finance industry.