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 - March 2017

View the Momentum Monitor Heatmap

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 1.1% in Q4 2016 and is down 10.1% from one year ago. The Agriculture Momentum Index rose from 94.6 (revised) in February to 97.3 in March. In December, Durable Goods Inventories rose 2.2% (the largest jump since January 2013), while Farm Machinery Inventories increased 3.2%. Overall, the Index suggests that the ongoing weakness in agricultural machinery investment should continue over the next three to six months.
Construction Machinery
Investment in Construction Machinery fell at a 5.6% annual rate in Q4 2016 (the seventh straight decline), and is down 20.4% year-over-year. The Construction Momentum Index declined from 92.8 (revised) in February to 89.9 in March. Housing Starts in the West plummeted 41.3% in January, and Construction Machinery Shipments fell 1.4% in December to their lowest level since April 2010. Overall, the Index continues to suggest stronger construction machinery investment growth over the next two quarters.
Materials Handling Equipment
Investment in Materials Handling Equipment rose by a 4.0% annual rate in Q4 2016, and is up 2.7% year-over-year. The Materials Handling Momentum Index decreased from 81.9 (revised) in February to 80.9 in March. In December, Real Manufacturing & Trade Sales rose 1.5%, the biggest one-month surge since November 2012. Overall, the Index points to improving investment growth in materials handling equipment over the next three to six months.
Other Industrial Equipment
Investment in All Other Industrial Equipment increased by a 4.9% annual rate in Q4 2016 and is up 1.2% from a year ago. The Other Industrial Equipment Momentum Index rose from 74.7 (revised) in February to 76.9 in March, its highest level in almost two years. In February the ISM Manufacturing Index rose 1.7 points to 57.7, its strongest reading since August 2014, while M1 increased 2.0% in January. Overall, the Index’s recent movement suggests little change in other industrial equipment investment growth over the next three to six months.
Medical Equipment
Investment in Medical Equipment expanded at a 6.8% annual rate in Q4 2016 and is up 1.3% year-over-year. The Medical Equipment Momentum Index increased from 95.3 (revised) in February to 96.6 in March. In January, Education & Health Services added 24,000 jobs, continuing a steady rise in employment. Overall, the Index points to continued slow growth in medical equipment investment over the next three to six months.
Mining & Oilfield Machinery
Investment in Mining & Oilfield Machinery declined at a 40.5% annual rate in Q4 2016 and is down 40.8% year-over-year. The Mining & Oilfield Machinery Momentum Index jumped from 84.3 (revised) in February to 89.6 in March, its strongest reading since March 2015. Oil & Gas Machinery Inventories jumped 2.6% in December, the largest one-month change since September 2014, while the Oil Rig Count rose 58 to 583 in January. Overall, the Index points to turnaround in mining & oilfield investment growth over the next two quarters.
Aircraft
Investment in Aircraft fell at a 13.4% annual rate in Q4 2016 and remains down 16.5% on a year-over-year basis. The Aircraft Momentum Index held steady at 90.5 from February (revised) to March. The ISM Non-Manufacturing New Orders Index climbed 2.6 points to 61.2 in February (its strongest reading in over a year), but both Capacity Utilization and Industrial Production ticked down in January. Overall, the Index’s current reading and recent movement point to continued weakness in aircraft investment growth over the next three to six months.
Ships & Boats
Investment in Ships & Boats rose at an annual rate of 12.1% in Q4 2016, but is down 2.8% year-over-year. The Ships & Boats Momentum Index held steady at 101.5 from February (revised) to March. Mobile Home Shipments surged 18.6% but Raw Steel Production plummeted 38.4%, the greatest jump and drop in the last 17 years. Overall, the Index points to improvement in ships & boats investment growth over the next three to six months.
Railroad Equipment
Investment in Railroad Equipment decreased at a 36.4% annual rate in Q4 2016 and is down 49.9% year-over-year. The Railroad Equipment Momentum Index dropped from 106.3 (revised) in February to 100.7 in March. Although Machine Tool Orders rose 23.4%, Average Weekly Hours ticked down and Petroleum Carloads fell 42.2%. Despite the recent decline, the Index continues to point to a strong rebound in railroad equipment investment growth over the next two quarters.
Trucks
Investment in Trucks expanded at a 12.0% annual rate in Q4 2016 but is down 4.1% from year-ago levels. The Trucks Momentum Index decreased from 97.0 (revised) in February to 95.5 in March. In February the ISM Manufacturing Index rose 1.7 points to 57.7, its strongest reading since August 2014. Overall, the Index continues to signal a pickup in trucking investment growth over the next two quarters.
Computers
Investment in Computers fell at an annual rate of 9.2% in Q4 2016 but is up 0.5% year-over-year. The Computers Momentum Index rose from 91.2 in February to 93.4 in March. Shipments of Consumer Goods jumped 4.0% in December, the biggest increase since June 2009; however, Defense Communication Equipment Shipments declined 9.2%. Overall, the Index continues to point to a strong rebound in computers investment growth over the next three to six months.
Software
Investment in Software rose by a 3.1% annual rate in Q4 2016, and is up 5.4% year-over-year. The Software Momentum Index declined from 106.4 (revised) in February to 105.0 in March. In February the ISM Non-Manufacturing Employment Index ticked up 0.5 points, but was offset by a 1.7% decline in the Producer Price Index for Software Publishers in January. Overall, the Index’s elevated position indicates that software investment growth should remain healthy over the first two quarters of 2017, but growth may moderate in the second half of the year.
Independent, forward-looking resources for the equipment finance industry.