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 39% (annualized) in Q2 2020 and is down 16% from one year ago. The Agriculture Momentum Index improved from 87.3 (revised) to 89.6 in September. Exports of Poultry Broilers pulled back 7.0% in June, while Lamb & Mutton Production decreased 3.2% in July. Overall, the Index continues to point to a modest to moderate contraction in agricultural machinery investment over the next six months.

Construction Machinery

Investment in Construction Machinery declined 44% (annualized) in Q2 2020 and is down 27% year-over-year. The Construction Momentum Index ticked up from 83.3 (revised) in August to 84.4 in September, its second consecutive monthly gain after hitting the lowest level in over a decade in July. Public Construction Spending eased 1.3% in July, while the Conference Board Consumer Confidence Index dropped 12% in August. Overall, the Index points to a continued contraction in construction machinery investment over the next 1–2 quarters, but recent movement is encouraging.

Materials Handling Equipment

Investment in Materials Handling Equipment declined at a 13% annualized rate in Q2 2020 and is down 7.3% year-over-year. The Materials Handling Momentum Index jumped from 64.2 (revised) in August to 71.1 in September. In July, Unfilled Orders for Materials Handling Equipment eased 0.6%, and Materials Handling Equipment Manufacturers’ Wages slipped 3.3%. Overall, the Index suggests continued negative growth in materials handling equipment investment over the next six months, but this month’s sharp improvement is notable.

Other Industrial Equipment

Investment in All Other Industrial Equipment contracted at a 28% annualized rate in Q2 2020 and dropped 11% from a year ago. The Other Industrial Equipment Momentum Index increased from 79.4 in August to 85.7 in September, though remains historically low. The Merchant Wholesale Industries Inventory-Sales Ratio decreased 7.9% in June, and Inventories of Machinery slipped 0.7% in July. Overall, the Index points to continued negativity in other industrial equipment investment growth over the next 1–2 quarters, but recent movement is encouraging.

Medical Equipment

Investment in Medical Equipment grew 15% (annualized) in Q2 2020 and improved 2.6% year-over-year. The Medical Equipment Momentum Index increased from 84.0 (revised) in August to 88.5 in September. Consumer Prices for Physician's Services inched up 0.7% in July, and Cardinal Health's Market Cap dropped 7.1% in August. Overall, the Index points to modest growth in medical equipment investment over the next six months.

Mining & Oilfield Machinery

Investment in Mining & Oilfield Machinery pulled back at a 55% annualized rate in Q2 2020 and fell 13% compared to a year ago. The Mining & Oilfield Machinery Momentum Index improved from 63.3 (revised) in August to 66.4 in September, though it remains in a weak position. Mining, Oil, and Gas Field Machinery Industrial Production declined 6.2% in July, while Oil & Gas Extraction Employment decreased 0.7% in August. Overall, the Index suggests continued negative growth in mining & oilfield investment growth over the next six months, despite this month’s improvement.

Aircraft

Investment in Aircraft plummeted 99% (annualized) in Q2 2020 and is 72% below year-ago levels. The Aircraft Momentum Index improved slightly from 96.5 in August to 98.2 in September. In July, Aerospace Exports to Canada collapsed 50%, and the Civilian Aircraft Exports plummeted 32%. Overall, the Index points to continued negative growth in aircraft investment over the next six months.

Ships & Boats

Investment in Ships & Boats fell sharply at an annualized rate of 64% in Q2 2020 and is down 21% year-over-year. The Ships & Boats Momentum Index improved from 98.1 (revised) in August to 102.8 in September. In July, Ships & Boats Shipments improved 8.1%, but the Emerging Market Economies Currency Index eased 1.8%. Overall, the Index points to continued negative growth in ships and boats investment in the coming 1–2 quarters, though recent movement in the index is encouraging and could signal improved investment in early 2021.

Railroad Equipment

Investment in Railroad Equipment dropped 34% (annualized) in Q2 2020 but is up 5.6% year-over-year. The Railroad Equipment Momentum Index increased from 66.6 (revised) in August to 71.2 in September. Producer Price Index of Rail Transportation eased 0.2% in July, and Rail Carloads of Farm & Food Products Excluding Grain fell 2.1% in August. Overall, the Index continues to suggest weakening growth in railroad equipment investment over the next two quarters, despite this month’s improvement.

Trucks

Investment in Trucks collapsed at an 82% annualized rate in Q2 2020 and is down 41% from year-ago levels. The Trucks Momentum Index jumped from 80.7 (revised) in August to 93.3 in September. In July, Industrial Production of Light Trucks surged 45%, however, Manufacturers' Inventories of Light Trucks & Utility Vehicles fell 1.3%. Overall, the Index points to improvement in trucks investment growth over the next two quarters.

Computers

Investment in Computers surged 83% (annualized) in Q2 2020 and is up 12% year-over-year. The Computers Momentum Index ticked up from 108.5 (revised) in August to 108.8 in September. In July, Capacity Utilization for Computer & Electronic Product Manufacturing inched up 0.3 point to 71.1%, but New Orders of Defense Search & Navigation Equipment fell 2.1% in July. Overall, the Index suggests that computers investment growth should remain solidly positive over the next six months.

Software

Investment in Software eased 3.2% (annualized) in Q2 2020 but is up 5.7% year-over-year. The Software Momentum Index improved from 90.9 (revised) in August to 94.3 in September. Revolving Consumer Credit Outstanding slipped 0.3% in June, but the NFIB Interest Rate Paid on Short-Term Loans rose 0.7 point to 4.8%. The Index points to continued growth in software investment over the next two quarters.