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 surged 146% (annualized) in Q3 2020 and is up 4.2% from one year ago. The Agriculture Momentum Index jumped from 92.6 (revised) in October to 97.9 in November, the highest level in three years. Exports of Poultry Broilers improved 4.5% in August, and the M1 Money Supply rose 2.1% in September. Overall, the Index’s elevated position and recent movement suggest that agricultural machinery investment growth should accelerate over the next six months.

Construction Machinery

IInvestment in Construction Machinery rose 43% (annualized) in Q3 2020 but is down 19% year-over-year. The Construction Momentum Index improved from 83.5 in October to 86.0 in November, though remains historically weak. In September, Housing Permits fell 15%, and the Commercial Property Price Index was down 14 points from February levels. Overall, although the Index has improved from recent lows, its historically weak level suggests soft growth in construction machinery investment over the next 3-6 months.

Materials Handling Equipment

Investment in Materials Handling Equipment expanded at a 39% annualized rate in Q3 2020 but was down 1.1% year-over-year. The Materials Handling Momentum Index increased from 72.3 (revised) in October to 75.0 in November. Inventories of Materials Handling Equipment eased 1.0% in August, while Export Prices of Materials Handling Equipment decreased 1.4% in September. Overall, the Index points to a potential improvement in materials handling equipment investment growth over the next six months.

Other Industrial Equipment

Investment in All Other Industrial Equipment grew 8.0% (annualized) in Q3 2020 but was 8.7% below year-ago levels. The Other Industrial Equipment Momentum Index rebounded sharply from 90.6 (revised) in October to 99.2 in November. Nonfarm Payrolls improved 0.5% in September, while Terex Market Cap surged 27% in October. Overall, the Index points to a bounce-back in other industrial equipment investment growth over the next 1-2 quarters.

Medical Equipment

Investment in Medical Equipment increased 40% (annualized) in Q3 2020 and was up 13% year-over-year. The Medical Equipment Momentum Index rose from 91.6 in October to 95.4 in November. New Orders of Nondefense Capital Goods rose 7.7% in August, while Consumer Prices for Physician's Services eased 0.3% in September. Overall, the Index points to solid growth in medical equipment investment over the next six months.

Mining & Oilfield Machinery

Investment in Mining & Oilfield Machinery pulled back at a 42% annualized rate in Q3 2020 and fell 19% compared to a year ago. The Mining & Oilfield Machinery Momentum Index rose from 71.9 (revised) in October to 78.9 in November, though remains below pre-pandemic lows. In October, WTI Cushing Spot Price declined 11%, and Brent Spot Price dropped 9.9%. Overall, the Index suggests the potential for improved mining & oilfield investment growth over the next six months, but Y/Y growth is likely to remain negative.

Aircraft

Investment in Aircraft surged 409% (annualized) in Q3 2020 but was 43% below year-ago levels. The Aircraft Momentum Index increased from 96.5 (revised) in October to 98.2 in November. However, in August, Spacecraft Exports to Mexico pulled back 43%, and Imports of Civilian Aircraft dropped 35%. Despite recent improvements, the Index suggests continued negative year-over-year growth in aircraft investment over the next six months.

Ships & Boats

Investment in Ships & Boats jumped at an annualized rate of 177% in Q3 2020 but is down 6.0% year-over-year. The Ships & Boats Momentum Index inched up from 99.1 (revised) in October to 100.0 in November. Exports of Ships, Boats, and Floating Structures to China nosedived 71% in August, but the University of Michigan Consumer Sentiment Index improved 1.4 points to 81.8. Overall, the Index points to continued weakness in ships & boats investment growth over the next two quarters, though recent movement is encouraging and a return to positive Y/Y growth is not out of the question.

Railroad Equipment

IInvestment in Railroad Equipment improved 5.0% (annualized) in Q3 2020 and is up 4.1% year-over-year. The Railroad Equipment Momentum Index improved from 78.2 (revised) in October to 82.1 in November. In September, Crude Oil and Petroleum Products Imports improved 3.6%, but Industrial Production of Energy eased 1.0%. Overall, the Index points to improved railroad equipment investment growth over the next 3-6 months.

Trucks

Investment in Trucks surged 317% (annualized) in Q3 2020 but was down 18% from year-ago levels. The Trucks Momentum Index surged from 96.6 in October to 106.8 in November. Earnings for Freight Trucking improved 1.4% in August, however, Industrial Production of Light Trucks dropped 9.7% in September. Overall, the Index points to a continued bounce-back in trucks investment growth over the next two quarters, though Y/Y growth may remain negative until 2021.

Computers

Investment in Computers jumped 41% (annualized) in Q3 2020 and is up 25% year-over-year. The Computers Momentum Index jumped from 108.4 in October to 115.8 in November. Sales of Computers & Computer Peripheral Equipment & Software grew 7.1% in August, while the ISM Manufacturing PMI rose 3.9 points to 59.3. Overall, the Index suggests that computers investment growth should remain historically strong over the next six months.

Software

Investment in Software improved 2.6% (annualized) in Q3 2020 and is up 3.4% from a year ago. The Software Momentum Index rose from 91.2 (revised) in October 94.5 in November. In September, NFIB Interest Rate Paid on Short-Term Loans increased 0.3 point to 5.1%, and the NFIB Small Business Survey Capital Expenditure Sub-Index rose 2 points to 28, in line with pre-pandemic levels. The Index continues to suggest that software investment growth will strengthen over the next two quarters.