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:

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.

Agricultural Machinery

Investment in Agricultural Machinery increased 3.2% (annualized) in Q3 2019 and is up 1.0% from one year ago. The Agriculture Momentum Index edged up from 93.8 (revised) in October to 94.6 in November. Shipments of Farm Machinery & Equipment rose 3.2% in August and the Federal Funds Effective Rate fell in October. Overall, the Index suggests the potential for modest improvement in agricultural machinery investment growth over the next three to six months.

Construction Machinery

Investment in Construction Machinery fell at a 6.0% annualized rate in Q3 2019 but is up 4.2% year-over-year. The Construction Momentum Index improved from 93.0 (revised) in October to 94.5 in November, matching the highest reading this year. Shipments of Construction Machinery increased 8.0% in August, the strongest improvement since mid-2012, while Public Construction Spending rose 1.5% in September. Overall, the Index points to modest growth in construction machinery investment over the next three to six months.

Materials Handling Equipment

Investment in Materials Handling Equipment improved at an 8.4% annualized rate in Q3 2019 but is down 0.6% year-over-year. The Materials Handling Momentum Index improved from 76.7 (revised) in October to 78.8 in November but remains historically weak. In October, Manufacturing Employment eased 0.3%, while the Chicago Business Barometer fell 8.3%, the seventh monthly decline this year. Overall, the Index points to continued weakness in materials handling equipment investment growth over the next two quarters, despite recent improvements.

Other Industrial Equipment

Investment in All Other Industrial Equipment increased at a 6.3% annualized rate in Q3 2019 and is up 4.7% from a year ago. The Other Industrial Equipment Momentum Index rose from 90.2 (revised) in October to 91.6 in November. Exports of Industry Supplies and Materials increased 4.0% in August, and the M1 Money Supply rose 1.6% in September. Overall, the Index suggests moderate growth in other industrial equipment investment over the next three to six months.

Medical Equipment

Investment in Medical Equipment fell at a 7.4% annualized rate in Q3 2019 but edged up 0.8% year-over-year. The Medical Equipment Momentum Index held steady at 91.0 from October (revised) to November. In September, the Consumer Price Index for Medical Care Services edged up 0.4%, the 13th consecutive increase, but the Capacity Utilization for Electrical Equipment Manufacturing fell 0.8 percentage point. Overall, the Index points to improved growth in medical equipment investment over the next two quarters.

Mining & Oilfield Machinery

Investment in Mining & Oilfield Machinery declined at a 24% annualized rate in Q3 2019 and is down 7.8% year-over-year. The Mining & Oilfield Machinery Momentum Index inched up from 98.3 in October to 99.2 in November. In September, Motor Gasoline Production fell 3.1%, the sharpest decline in a year, while Industrial Production for Natural Gas Distribution dropped 1.5%. Overall, the Index suggests little improvement in mining & oilfield machinery investment over the next three to six months.

Aircraft

Investment in Aircraft plummeted 80% (annualized) in Q3 2019 and is now 45% below year-over-year levels. The Aircraft Momentum Index eased from 96.7 (revised) in October to 95.8 in November. Imports of Civilian Aircraft decreased 11% in August, while the S&P 500 Volatility Index fell 19% in October, the sixth-double digit monthly decline in a year. Overall, the Index suggests continued negative growth in aircraft investment over the next two quarters.

Ships & Boats

Investment in Ships & Boats surged at an annualized rate of 25% in Q3 2019 but is down 3.1% year-over-year. The Ships & Boats Momentum Index improved slightly from 100.9 (revised) in October to 101.7 in November. Houston Shipping Container Traffic pulled back 2.9% in September, the eighth monthly decline in a year, while the Advanced Foreign Economies Currency Index eased 0.4% in October. Overall, despite this month’s improvement, the Index continues to point to weak growth in ships and boats investment over the next three to six months.

Railroad Equipment

Investment in Railroad Equipment rose at a 2.8% annualized rate in Q3 2019 and is up 14% year-over-year. The Railroad Equipment Momentum Index increased from 70.5 (revised) in October to 72.8 in November. In September, Industrial Production for Railroad Rolling Stock fell 2.4%, while Capacity Utilization for Transportation Equipment Manufacturing fell 1.6 percentage points to the lowest level since April. Overall, the Index continues to indicate slower year-over-year growth in railroad equipment investment over the next three to six months.

Trucks

Investment in Trucks rose at an 8.2% annualized rate in Q3 2019 and is up 7.3% from year-ago levels. The Trucks Momentum Index eased from 105.8 in October to 105.0 in November. Manufacturers' Inventories of Light Trucks & Utility Vehicles improved 2.5% in August, and Capacity Utilization for Furniture Manufacturing increased 1.0 percentage point, the strongest increase since January 2017. Overall, the Index points to moderate growth in trucks investment over the next three to six months.

Computers

Investment in Computers decreased at an annualized rate of 31% in Q3 2019 and fell 1.3% year-over-year. The Computers Momentum Index held steady at 93.5 from October (revised) to November, remaining at the lowest level since July 2016. In August, Revolving Consumer Credit eased 0.2%, while New Orders for Electromedical Products decreased 1.0%. Overall, the Index points to continued weak growth in computers investment over the next two quarters.

Software

Investment in Software increased at an 8.2% annualized rate in Q3 2019 and is up 9.8% year-over-year. The Software Momentum Index edged down from 96.6 (revised) in October to 95.8 in November. In October, the S&P 500 Software & Services Index rose 1.6%, the ninth monthly increase in the past year, and Microsoft's Market Cap grew 3.0%. Overall, the Index points to continued solid growth in software investment over the next two quarters.