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 decreased 6.0% (annualized) in Q1 2020 and is down 5.7% from one year ago. The Agriculture Momentum Index held steady at 91.2 from April (revised) to May. Lamb & Mutton Production pulled back 10% in February, and Agricultural Machinery Industrial Production dropped 4.8% in March. Overall, the Index suggests continued weakness in agricultural machinery investment growth over the next six months.

Construction Machinery

Investment in Construction Machinery pulled back 21% (annualized) in Q1 2020 and fell 15% year-over-year. The Construction Momentum Index remained at 93.4 from April to May. New Homes for Sale jumped 24% in March, while the Conference Board Consumer Confidence Index plummeted 90 points to 76.4 in April, the sharpest drop on record. Overall, the Index points to continued negative growth in construction machinery investment over the next two quarters.

Materials Handling Equipment

Investment in Materials Handling Equipment fell at a 6.8% annualized rate in Q1 2020 and is down 4.8% year-over-year. The Materials Handling Momentum Index held steady at a multi-year low of 79.2 from April (revised) to May. Inventories of Materials Handling Equipment decreased 1.2% in February, and Industrial Production plummeted 5.4% in March, the largest monthly decline since 1946. Overall, the Index suggests continued contraction in materials handling equipment investment over the next six months.

Other Industrial Equipment

Investment in All Other Industrial Equipment fell at a 7.3% annualized rate in Q1 2020 and decreased 2.2% from a year ago. The Other Industrial Equipment Momentum Index fell sharply from 95.3 (revised) in April to 89.0 in May, the lowest level since mid-2015. Nonfarm Payrolls dropped 0.5% in March, and the ISM Manufacturing PMI cratered 7.6 points to 41.5 in April, the lowest level in over a decade. Overall, the Index points to negative investment growth in other industrial equipment over the next two quarters.

Medical Equipment

Investment in Medical Equipment increased at an 1.5% annualized rate in Q1 2020 and edged up 0.9% year-over-year. The Medical Equipment Momentum Index fell from 93.1 (revised) in April to 89.3 in May. In March, Medical Equipment and Supplies Industrial Production decreased 1.6%, and Consumer Spending on Professional Medical Services pulled back 25%. Overall, the Index points to stagnant growth in medical equipment investment over the next six months, though the investment picture could change quickly depending on how the public health situation unfolds.

Mining & Oilfield Machinery

Investment in Mining & Oilfield Machinery improved at a 50% annualized rate in Q1 2020 and rose 15% compared to a year ago. The Mining & Oilfield Machinery Momentum Index fell from 81.5 (revised) in April to 74.6 in May, the lowest level since August 2016. In March, Motor Gasoline Production dropped 13%, and Crude Oil Production decreased 5.3%. Overall, the Index points to a steep decline in mining & oilfield investment activity over the next six months.

Aircraft

Investment in Aircraft dropped 28% (annualized) in Q1 2020 and is 37% below year-ago levels. The Aircraft Momentum Index inched down from 100.8 (revised) in April to 99.9 in May. In March, Consumer Spending on Pleasure Aircraft fell 26%, while Industrial Production of Aerospace Transportation Equipment declined 8.1%. Overall, while the Index points to a potential improvement in aircraft investment growth, the Index does not yet reflect the near-standstill in air travel that has occurred since mid-March. Aircraft investment is likely to remain weak for the next two quarters.

Ships & Boats

Investment in Ships & Boats fell at an annualized rate of 14% in Q1 2020 and is down 8.3% year-over-year. The Ships & Boats Momentum Index decreased from 106.5 in April (revised) to 103.7 in May. In April, the University of Michigan Consumer Sentiment Index fell sharply by 17 points to 71.8, and the ISM Manufacturing Employment Sub-Index plummeted 16 points to 27.5. Overall, investment in ships & boats is likely to contract further due to reduced global trade driven by COVID-19.

Railroad Equipment

Investment in Railroad Equipment surged 56% (annualized) in Q1 2020 and is up 30% year-over-year. The Railroad Equipment Momentum Index decreased from 81.3 (revised) in April to 76.6 in May, a multi-year low. Crude Oil and Petroleum Products Imports decreased 3.2% in March, and Oil and Gas Rig Counts pulled back 42% in April. Overall, the Index continues to suggest that growth in railroad equipment investment will pull back over the next two quarters.

Trucks

Investment in Trucks declined at a steep 35% annualized rate in Q1 2020 and is down 10% from year-ago levels. The Trucks Momentum Index fell again in May to 89.8, down from 94.1 (revised) in April. Industrial Production of Light Trucks fell 37% in March, while Capacity Utilization for Furniture Manufacturing declined 7.8 percentage points to 69.5%. Overall, the Index continues to point to a sharp contraction in trucks investment over the next six months.

Computers

Investment in Computers plunged 30% (annualized) in Q1 2020 and is down 3.4% year-over-year. The Computers Momentum Index decreased from 115.6 in April to 112.5 in May. New Orders of Defense Search & Navigation Equipment edged up 0.7% in February, and Computer Export Prices rose 3.4% in March. Overall, despite this month’s decline, the Index continues to point to a potential improvement in computers investment growth over the next six months.

Software

Investment in Software expanded at an 8.2% annualized rate in Q1 2020 and is up 8.3% year-over-year. The Software Momentum Index slipped from 94.0 (revised) in April to 92.4 in May, a multi-year low. In March, the NFIB Small Business Survey Capital Expenditure Plans Sub-Index fell 19%, and Shipments of Computers & Related Products decreased 3.4%. Overall, the Index points to softening growth in software investment over the next six months, though widespread adoption of work-from-home policies may not be fully captured by the Index and could insulate this vertical in the months ahead.