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 6.8% (annualized) in Q4 2019 and is down 4.8% from one year ago. The Agriculture Momentum Index held at 95.3 from February to March. In December, Exports of Poultry Broilers dropped 8.7%, while Unmanufactured Tobacco Exports pulled back 12%. Overall, the Index points to continued weakness in agricultural machinery investment growth over the next six months.

Construction Machinery

Investment in Construction Machinery dropped at a sharp 37% annualized rate in Q4 2019 and is down 7.0% year-over-year. The Construction Momentum Index held steady at 90.9 from February to March, matching the lowest level in a year. New Privately-Owned Homes Under Construction increased 1.3% in January, and the Conference Board Consumer Confidence Index declined 5.1% in February. Overall, the Index suggests that investment growth in construction machinery is likely to remain negative over the next six months.

Materials Handling Equipment

Investment in Materials Handling Equipment fell at an 11% annualized rate in Q4 2019 and dropped 3.4% year-over-year. The Materials Handling Momentum Index fell from 83.3 in February to 79.9 in March, a multi-year low. In December, Inventories of Materials Handling Equipment fell 7.2%, while Materials Handling Equipment Exports dropped 9.7%. Overall, the Index points to continued negative growth in materials handling equipment investment growth over the next six months.

Other Industrial Equipment

Investment in All Other Industrial Equipment fell at a 13% annualized rate in Q4 2019 and eased 1.5% from a year ago. The Other Industrial Equipment Momentum Index improved from 95.3 in February 97.6 in March. Nonfarm Payrolls inched up 0.1% in January, while Terex Market Cap dropped 14% in February, the second consecutive double-digit decline. Overall, the Index points to modest turnaround in other industrial equipment investment growth over the next two quarters.

Medical Equipment

Investment in Medical Equipment fell at a 2.3% annualized rate in Q4 2019 and is essentially flat year-over-year. The Medical Equipment Momentum Index improved from 96.2 in February to 98.5 in March, its highest reading in two years. In January, Consumer Prices for Physicians’ Services fell 0.4%, while Scientific & Medical Machinery Export Prices rose 0.7%. Overall, the Index points to improved growth in medical equipment investment over the next six months. expanded 0.6% in December, and Johnson & Johnson Market Cap grew 2.1% in January. Overall, the Index points to improved growth in medical equipment investment growth over the next six months.

Mining & Oilfield Machinery

Investment in Mining & Oilfield Machinery improved at an 22% annualized rate in Q4 2019 and is slightly positive (0.7%) over the last 12 months. The Mining & Oilfield Machinery Momentum Index eased from 85.5 (revised) in February to 84.7 in March. In January, the Brent Crude Oil Spot Price fell 15%, the sharpest decline since November 2018, but Mining & Logging Employment edged up 0.3%. Overall, the Index suggests weak but positive growth in mining and oilfield machinery investment over the next six months.

Aircraft

Investment in Aircraft surged at an 113% (annualized) in Q4 2019 but is 45% below year-ago levels. The Aircraft Momentum Index edged up from 99.1 (revised) in February to 99.9 in March. Shipments of Non-Defense Aircraft & Parts pulled back 21% in January, while the Market Cap of Southwest Airlines fell 16% in February. Overall, the Index continues to suggest negative aircraft investment growth over the next six months.

Ships & Boats

Investment in Ships & Boats dropped at an annualized rate of 9.2% in Q4 2019 and eased 1.1% year-over-year. The Ships & Boats Momentum Index remained at 99.1 from February (revised) to March. In December, Exports of Ships, Boats, and Floating Structures to China fell 21%, while Ships & Boats Shipments pulled back 6.0%. Overall, Index points to further weakening in ships and boats investment growth over the next six months.

Railroad Equipment

Investment in Railroad Equipment contracted at a 5.5% annualized rate in Q4 2019 but is up 15% year-over-year. The Railroad Equipment Momentum Index declined from 88.2 (revised) in February to 85.2 in March, matching the lowest level since September 2016. In January, Rail Carloads of Forest Products fell 16%, and Crude Oil and Petroleum Products Imports rose 4.1%. Overall, the Index points to a slowdown in railroad equipment investment growth over the next two quarters. rose 5.9% in December, while the Bloomberg Petroleum Sub-Index dropped 15% in January. Overall, the Index suggests that growth in railroad equipment investment is likely to slow over the next two quarters.

Trucks

Investment in Trucks inched pulled back 8.2% annualized rate in Q4 2019 but is up 1.8% from year-ago levels. The Trucks Momentum Index held steady at 98.3 from February (revised) to March, remaining at the lowest level since mid-2016. Shipments of Heavy-Duty Trucks fell 3.4% in December, and Sales of Heavy-Duty Trucks declined 7.3% in January. Overall, the Index points to continued weak growth in trucks investment over the next six months.

Computers

Investment in Computers surged at an annualized rate of 30% in Q4 2019 and is up 7.8% year-over-year. The Computers Momentum Index rose from 110.4 (revised) in February to 114.6 in March, the highest level since November 2018. Capacity Utilization for Computers & Electronic Products Manufacturing improved 0.3 point to 73.2% in January, and the University of Michigan Consumer Sentiment Index improved 1.6 points to 92.1 in February. Overall, the Index points to solid growth in computers investment over the next six months.

Software

Investment in Software improved at a 5.3% annualized rate in Q4 2019 and is up 8.9% year-over-year. The Software Momentum Index remained at 96.4 from February to March. Shipments of Computers & Related Products rose 8.2% in January, while the ZEW Current Economic Situation Index improved 14% in February, the second consecutive month of double-digit growth. Overall, the Index points to slower (but still positive) growth in software investment over the next six months.