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 dropped 43% (annualized) in Q2 2020 and is down 17% from one year ago. The Agriculture Momentum Index eased from 87.3 (revised) in July to 86.5 in August. Food and Beverage Consumption Spending eased 0.5% in June, while Caterpillar’s Market Cap pulled back 30% in July. Overall, the Index points to negative growth in agricultural machinery investment over the next six months.

Construction Machinery

Investment in Construction Machinery declined 45% (annualized) in Q2 2020 and pulled back 27% year-over-year. The Construction Momentum Index decreased from 82.6 (revised) in July to 80.2 in August, the lowest level in over a decade. Shipments of Construction Machinery fell 2.8% in May, and Housing Starts in the Western U.S. declined 7.5% in June. Overall, the Index points to continued contraction in construction machinery investment over the next two quarters.

Materials Handling Equipment

Investment in Materials Handling Equipment declined at a 15% annualized rate in Q2 2020 and is down 7.7% year-over-year. The Materials Handling Momentum Index fell sharply from 69.5 (revised) in July to 63.3 in August, the lowest reading since 2009. In May, Inventories of Materials Handling Equipment fell 2.3%, while Shipments of Materials Handling Equipment slipped 0.9%. Overall, the Index suggests continued negative growth in materials handling equipment investment over the next six months.

Other Industrial Equipment

Investment in All Other Industrial Equipment contracted at a 26% annualized rate in Q2 2020 and dropped 10% from a year ago. The Other Industrial Equipment Momentum Index held steady at 78.7 from July (revised) to August. Average Weekly Earnings for Production & Non-Supervisory Employees decreased 1.5% in June, and Terex Market Cap pulled back 16% in July. Overall, the Index points to continued negative growth in industrial equipment investment over the next two quarters.

Medical Equipment

Investment in Medical Equipment grew 14% (annualized) in Q2 2020 and improved 2.4% year-over-year. The Medical Equipment Momentum Index edged up from 84.7 (revised) in July to 85.5 in August. In June, Consumer Prices for Physician's Services inched up 0.5%, and Capacity Utilization for Electrical Equipment Manufacturing was 7.9 points below February levels. Overall, the Index points to weak growth in medical equipment investment over the next six months.

Mining & Oilfield Machinery

Investment in Mining & Oilfield Machinery pulled back at a 45% annualized rate in Q2 2020 and fell 8.6% compared to a year ago. The Mining & Oilfield Machinery Momentum Index slipped from 61.7 (revised) in July to 60.9 in August, a historic low. In June, Mining & Logging Employment decreased 1.6%, while Crude Oil Production waned 1.8%. Overall, the Index suggests negative growth in mining & oilfield investment activity over the next six months.

Aircraft

Investment in Aircraft plummeted 99% (annualized) in Q2 2020 and is 72% below year-ago levels. The Aircraft Momentum Index ticked up from 96.4 (revised) in July to 96.5 in August. In July, the S&P 500 Volatility Index collapsed 20%, and the Market Cap of Southwest Airlines pulled back 9.6%. Overall, the Index points to continued weakness in aircraft investment over the next three to six months.

Ships & Boats

Investment in Ships & Boats nosedived at an annualized rate of 68% in Q2 2020 and is down 23% year-over-year. The Ships & Boats Momentum Index fell from 92.8 (revised) in July to 91.9 in August, its fourth consecutive monthly decline and lowest reading in nearly a decade. Houston Shipping Container Traffic declined 5.1% in June, while the University of Michigan Consumer Sentiment Index dropped 5.6 points in July. Overall, investment in ships & boats is likely to continue to contract in the coming two quarters.

Railroad Equipment

Investment in Railroad Equipment dropped 33% (annualized) in Q2 2020 but is up 6.0% year-over-year. The Railroad Equipment Momentum Index decreased from 67.2 (revised) in July to 62.5 in August, the lowest level on record. In June, Crude Oil and Petroleum Products Imports surged 20%, while Rail Transportation Employment declined 1.7% for the 17th consecutive quarter. Overall, the Index continues to suggest that growth in railroad equipment investment will weaken significantly over the next two quarters.

Trucks

Investment in Trucks collapsed at an 83% annualized rate in Q2 2020 and is down 43% from year-ago levels. The Trucks Momentum Index inched up from 72.9 (revised) in July to 74.6 in August. In May, Shipments of Heavy-Duty Trucks and Manufacturers' Inventories of Light Trucks & Utility Vehicles were down 34% and 14% from February levels, respectively. Overall, the Index suggests deep negativity in trucks investment growth over the next six months.

Computers

IInvestment in Computers surged 68% (annualized) in Q2 2020 and are up 9.7% year-over-year. The Computers Momentum Index slipped from 109.4 (revised) in July to 108.3 in August. Sales of Computers & Computer Peripheral Equipment & Software fell 2.8% in May, but the ISM Manufacturing PMI improved 1.6 points 54.2. Overall, the Index suggests that computers investment growth will remain positive over the next six months.

Software

Investment in Software eased 1.4% (annualized) in Q2 2020 but is up 6.1% year-over-year. The Software Momentum Index held steady at 88.8 from July (revised) to August. Revolving Consumer Credit Outstanding fell 2.4% in May, while the NFIB Interest Rate Paid on Short-Term Loans Index eased 0.1 point in June to the lowest level on record. The Index points to softer but positive growth in software investment over the next two quarters.