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 fell 2.8% (annualized) in Q1 2019 but is up 11% from one year ago. The Agriculture Momentum Index inched up from increased from 90.0 (revised) in June to 95.5 in July, its highest level since December. Wholesale Trade of Miscellaneous Durable Goods improved 0.7% in April, and Soybean Futures improved 2.0% in June. Overall, the Index points to positive growth in agricultural machinery investment over the next three to six months.

Construction Machinery

Investment in Construction Machinery increased at a 10% annualized rate in Q1 2019 and is up 5.2% year-over-year. The Construction Momentum Index improved from 88.5 (revised) in June to 90.1 in July. In May, Non-Residential Construction Spending fell 0.9%, while New Privately- Owned Houses declined 2.6%, their seventh decrease in a year. Overall, the Index suggests further weakening and potentially stalled growth in construction machinery investment over the next three to six months.

Materials Handling Equipment

Investment in Materials Handling Equipment decreased at a 1.4% annualized rate in Q1 2019 but is up 1.8% year-over-year. The Materials Handling Momentum Index eased from 80.5 (revised) in June to 79.8 in July, its lowest level since November 2015. In May, Unfilled Orders for Materials Handling Equipment eased 0.5%, and Earnings in Materials Handling Equipment Manufacturing fell 0.5%, their sixth consecutive decline. Overall, the Index points to slowing and potentially negative growth in materials handling equipment investment over the next two quarters.

Other Industrial Equipment

Investment in All Other Industrial Equipment declined at a 3.6% annualized rate in Q1 2019 but is up 2.3% from a year ago. The Other Industrial Equipment Momentum Index increased from 84.4 (revised) in June to 85.8 in July. Domestic Manufacturing & Trade Sales fell 0.9% in April, but Exports of Other Industrial Supplies rose 2.1% in May, their strongest improvement since July 2018. Overall, despite this month’s modest improvement, the Index continues to suggest weaker and potentially stalled growth in other industrial equipment investment over the next three to six months.

Medical Equipment

Investment in Medical Equipment crept up at a 0.7% annualized rate in Q1 2019 and rose 5.1% year-overyear. The Medical Equipment Momentum Index rose from 87.2 (revised) in June to 88.7 in July. Consumer Spending on Professional Medical Services rose 0.3% in May, and the S&P 500 Health Care Index rose 6.3% in June, its strongest improvement since November 2018. Overall, the Index points to moderate growth in medical equipment investment over the next two quarters.

Mining & Oilfield Machinery

Investment in Mining & Oilfield Machinery dropped at a 13% annualized rate in Q1 2019 and is down 8.2% year-over-year. The Mining & Oilfield Machinery Momentum Index increased slightly from 98.3 in June to 99.2 in July. In June, Mining & Logging Employment rose 0.9%, its ninth consecutive improvement, but the Bloomberg Natural Gas Sub- Index dropped 6.2%. Overall, recent movement in the Index suggests little change in mining & oilfield machinery investment over the next three to six months, but its elevated position is encouraging.

Aircraft

Investment in Aircraft declined 39% (annualized) in Q1 2019 and is down 8.0% on a year-over-year basis. The Aircraft Momentum Index held steady at 95.8 from June to July. Imports of Civilian Aircraft rose 12% in May, but the S&P 500 Volatility Index fell 19% in June, its eighth decline in the past year. Overall, the Index points to continued weak growth in aircraft investment over the next two quarters, despite this month’s improvement.

Ships & Boats

Investment in Ships & Boats increased at an annualized rate of 16% in Q1 2019 and rose 2.4% year-over-year. The Ships & Boats Momentum Index rose from 104.3 (revised) in June to 106.1 in July. In May, the Producer Price Index for Ship and Boat Building rose 0.3%, but Industrial Production of Ships and Boats fell 1.2%. Overall, the Index points to sluggish and potentially stalled growth in ships and boats investment over the next three to six months.

Railroad Equipment

Investment in Railroad Equipment increased at an 18% annualized rate in Q1 2019 but is down 5.8% year-over-year. The Railroad Equipment Momentum Index dropped from 78.9 (revised) in June to 74.4 in July, its lowest level since August 2016. Industrial Production for Railroad Rolling Stock decreased 1.5% in May, its steepest decline since September, and the ISM Manufacturing Supplier Deliveries Index dropped 1.3 points in June. Overall, the Index points to continued weakness in railroad equipment investment growth over the next three to six months.

Trucks

Investment in Trucks surged at a 19% annualized rate in Q1 2019 and is up 12% from year-ago levels. The Trucks Momentum Index increased from 100.0 (revised) in June to 105.0 in July, its highest level since February. In May, Earnings for Freight Trucking increased 1.5%, their tenth improvement in the past year, and Coal Production rose 1.9%. Overall, the Index suggests continued moderate growth in trucks investment over the next three to six months.

Computers

Investment in Computers increased at an annualized rate of 9.6% in Q1 2019 and is up 1.3% year-over-year. The Computers Momentum Index improved from 99.2 (revised) in June to 101.7 in July, its first improvement in eight months. In May, Manufacturers' Inventories of Computers & Electronic Products decreased 0.6%, and Computer Export Prices fell 2.5%. Overall, the Index points to continued sluggish growth in computers investment over the next two quarters.

Software

Investment in Software surged at an 17% annualized rate in Q1 2019 and is up 12% year-over-year. The Software Momentum Index rose from 94.3 (revised) in June to 98.3 in July. In May, the Producer Price Index for Software Publishers rose 1.1%, and the ZEW Current Economic Situation Indicator improved 5.2%. Overall, the Index points to continued solid growth in software investment over the next two quarters.