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 7.2% (annualized) in Q2 2019 but is up 0.8% from one year ago. The Agriculture Momentum Index ticked up from 93.9 (revised) in July to 94.7 in August. Unmanufactured Tobacco Exports surged more than 350% in May, their largest increase in decades, while Shipments of Farm Machinery & Equipment increased 4.7% in June. Overall, the Index continues to point to positive growth in agricultural machinery investment over the next three to six months.

Construction Machinery

Investment in Construction Machinery rose at a 14% annualized rate in Q2 2019 and is up 5.3% year-over-year. The Construction Momentum Index edged up from 89.2 (revised) in July to 90.0 in August. In June, Shipments of Construction Machinery increased 2.1%, but Public Construction Spending fell 3.7%. Overall, the Index suggests continued weak growth in construction machinery investment over the next three to six months.

Materials Handling Equipment

Investment in Materials Handling Equipment decreased at a 7.3% annualized rate in Q2 2019 and is down 0.4% year-over-year. The Materials Handling Momentum Index held steady at 78.4 from July (revised) to August, remaining at its lowest level since November 2015. Primary Energy Consumption fell 12% in April, and the Chicago Business Barometer declined 11% in July, its steepest drop since January. Overall, the Index points to continued weakness in materials handling equipment investment over the next two quarters.

Other Industrial Equipment

Investment in All Other Industrial Equipment increased at a 4.2% annualized rate in Q2 2019 and is up 3.7% from a year ago. The Other Industrial Equipment Momentum Index eased from 88.5 (revised) in July to 87.8 in August. In June, Capacity Utilization for Electrical Equipment Manufacturing decreased 0.9 point to its second-lowest level since March 2010, and Industrial Production for Total Machinery dropped 1.0%. Overall, the Index continues to point to weak and potentially stalled growth in other industrial equipment investment over the next three to six months.

Medical Equipment

Investment in Medical Equipment increased at a 15% annualized rate in Q2 2019 and rose 6.3% year-over-year. The Medical Equipment Momentum Index improved from 86.5 (revised) in July to 88.0 in August. The Consumer Price Index for Dental Services increased 1.1% in June, its strongest growth since February 2018, and Medtronic's Market Cap rose 4.7% in July. Overall, the Index continues to point to moderate growth in medical equipment investment over the next two quarters.

Mining & Oilfield Machinery

Investment in Mining & Oilfield Machinery surged at a 31% annualized rate in Q2 2019 but is down 7.2% year-over-year. The Mining & Oilfield Machinery Momentum Index decreased from 98.3 (revised) in July to 97.5 in August. Industrial Production for Mining, Oil, & Gas Machinery decreased 1.7% in June, and the Bloomberg Natural Gas Sub-Index dropped 2.2% in July for the eighth consecutive month. Overall, the Index suggests continued weak growth in mining & oilfield machinery investment over the next three to six months.

Aircraft

Investment in Aircraft declined 49% (annualized) in Q2 2019 and is down 27% on a year-over-year basis. The Aircraft Momentum Index eased from 95.8 in July to 95.0 in August. Exports of Computers & Electronic Products decreased 2.8% in June, while Boeing Stock Returns fell 6.3% in July. Overall, the Index points to continued weak growth in aircraft investment over the next two quarters.

Ships & Boats

Investment in Ships & Boats fell at an annualized rate of 35% in Q2 2019 and is down 4.2% year-over-year. The Ships & Boats Momentum Index decreased from 109.5 (revised) in July to 107.8 in August. Rice & Other Food Grains Exports increased 11% in May, but the Manufacturing Employment Index fell 5.1% in July, its sixth monthly decline in the past 10 months. Overall, the Index’s elevated position suggests the potential for a modest improvement in ships and boats investment growth over the next three to six months.

Railroad Equipment

Investment in Railroad Equipment expanded at an 19% annualized rate in Q2 2019 and is up 7.2% year-over-year. The Railroad Equipment Momentum Index dropped from 74.4 in July to 69.9 in August, its third consecutive decline and lowest level in over three years. Industrial Production for Railroad Rolling Stock pulled back 3.0% in June, its eight decline in the past year, and Rail Carloads of Petroleum Products fell 5.4% in July. Overall, the Index continues to point to weaker and potentially negative growth in railroad equipment investment over the next three to six months.

Trucks

Investment in Trucks increased at a 2.8% annualized rate in Q2 2019 and is up 7.7% from year-ago levels. The Trucks Momentum Index increased from 105.0 in July to 106.6 in August. In June, Shipments of Light Trucks & Utility Vehicles rose 6.7%, their sharpest increase in a year, while New Orders for Trailers & Parts increased 1.0%. Overall, the Index points to moderate growth in trucks investment over the next three to six months.

Computers

Investment in Computers increased at an annualized rate of 18% in Q2 2019 and is up 4.9% year-over-year. The Computers Momentum Index eased from 101.7 in July to 100.0 in August, remaining near multi-year lows. New Orders for Computers decreased 1.8% in June, and the ISM Manufacturing PMI fell 0.5 point in July, its eighth monthly decline in the past year. Overall, the Index indicates slow but positive growth in computers investment over the next two quarters.

Software

Investment in Software rose at a 7.5% annualized rate in Q2 2019 and is up 10% year-over-year. The Software Momentum Index rose from 97.4 (revised) in July to 98.2 in August, its highest level since October. In July, IBM's Market Cap increased 7.5%, and the S&P 500 Software & Services Index rose 2.2%. Overall, the Index points to continued solid growth in software investment over the next two quarters.