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 24% (annualized) in Q1 2021 but is up 12% from one year ago. The Agriculture Momentum Index decreased from 110.3 (revised) in April to 107.2 in May. Exports of Poultry Broilers fell by 7.8% in February, while Agricultural Machinery Industrial Production increased by 5.0% in April. Overall, the Index’s position suggests that agriculture machinery investment growth should remain strong over the next three to six months.

Construction Machinery

Investment in Construction Machinery expanded 33% (annualized) in Q1 2021 and is 3.9% above its year-ago level. The Construction Momentum Index eased from 97.5 (revised) in April to 96.7 in May. Housing Permits rose by 21.3% in March, but Public Construction Spending declined 2.1% in March. Overall, the Index’s position suggests that construction machinery investment growth should strengthen over the next two quarters.

Materials Handling Equipment

Investment in Materials Handling Equipment grew at a 4.9% annualized rate in Q1 2021 and is up 13% year-over-year. The Materials Handling Momentum Index edged down from 92.9 (revised) in April to 90.2 in May. Inventories of Materials Handling Equipment increased by 1.3% in February, while the S&P Composite 1500 Industrials Index rose by 3.8% in April. Overall, the Index’s position suggests that materials handling equipment investment growth should remain in positive territory and may strengthen over the next six months.

Other Industrial Equipment

Investment in All Other Industrial Equipment rose 6.2% (annualized) in Q1 2021 and is roughly unchanged at 0.1% above year-ago levels. The Other Industrial Equipment Momentum Index increased from 113.4 in April (revised) to 116.5 in May, the second-highest reading in nearly a decade. In March, Machinery Industrial Production rose by 2.9%, while Exports Prices of Industrial Supplies & Materials increased by 5.0%. Overall, the healthy position of the Index suggests that other industrial equipment investment growth should strengthen over the next two quarters.

Medical Equipment

Investment in Medical Equipment rose 14% (annualized) in Q1 2021 and is up 23% year-over-year. The Medical Equipment Momentum Index ticked up from 105.0 (revised) in April to 108.1 in May, the highest level in over seven years. In March, Medical Equipment and Supplies Industrial Production rose by 0.6%, while Other Professional Medical Services Expenditures edged up by 0.2%. Overall, the Index points to strong medical equipment investment growth over the next six months.

Mining & Oilfield Machinery

Investment in Mining & Oilfield Machinery increased 18% (annualized) in Q1 2021 but is 21% below year-ago levels. The Mining & Oilfield Machinery Momentum Index edged down from 89.2 (revised) in April to 87.7 in May. The Brent Spot Price rose by 6.6% in April, though the S&P Steel Index eased 0.4% in the same month. Overall, the Index’s position suggests that mining & oilfield equipment investment growth should begin to improve in the next 3-6 months, but year-over-year growth rates may remain negative in the short term.

Aircraft

Investment in Aircraft expanded 31% (annualized) in Q1 2021 but is 25% below year-ago levels. The Aircraft Momentum Index improved from 111.1 (revised) in April to 113.7 in May, marking the highest level in over eleven years. Shipments of Non-Defense Aircraft & Parts rose by 10.1% in March and Southwest’s Market Cap rose by 2.8% in April. The Index’s position and recent movement suggest that Aircraft investment growth should continue to improve over the next six months.

Ships & Boats

Investment in Ships & Boats ticked up at an annualized rate of 1.3% in Q1 2021 and is 3.6% above its year-ago level. The Ships & Boats Momentum Index improved from 100.9 (revised) in April to 105.4 in May. Exports of Ships, Boats, and Floating Structures to China surged by nearly 300% in February but New Orders of Ships and Boats fell 58% in February. Overall, the Index points to modest growth in ships & boats investment over the next six months.

Railroad Equipment

Investment in Railroad Equipment expanded 51% (annualized) in Q1 2021 but was down 6.3% year-over-year. The Railroad Equipment Momentum Index decreased from 97.7 (revised) in April to 96.1 in May. In March, Rail Transportation Employment edged down by 0.6%, while Rail Carloads of Coal surged by 40.0%. Overall, the Index’s position and recent movement suggest that railroad equipment investment growth should return to positive territory over the next six months.

Trucks

Investment in Trucks grew 14% (annualized) in Q1 2021 and was up 7.5% from year-ago levels. The Trucks Momentum Index fell sharply from 117.8 (revised) in April to 108.5 in May. In February, Manufacturers' Inventories of Light Trucks & Utility Vehicles rose by 5.5%, while Shipments of Light Trucks fell 15%. The elevated position of the Index suggests that trucks investment growth should return to positive territory over the next two quarters, though the recent, steep decline in the Index suggests that upside potential may be limited.

Computers

Investment in Computers surged 65% (annualized) in Q1 2021 and was up 47% year-over-year. The Computers Momentum Index ticked down from 111.6 (revised) in April to 110.5 in May. In March, Capacity Utilization for Computer & Electronic Product Manufacturing increased by 1.7%, while Retail Sales Excluding Motor Vehicles and Parts rose by 9.2%. Overall, the Index suggests that computers investment growth may slow somewhat over the next six months but should remain strong.

Software

Investment in Software rose 18% (annualized) in Q1 2021 and grew 7.6% from a year prior. The Software Momentum Index ticked up from 103.6 (revised) in April to 105.5 in May. The ISM Nonmanufacturing Business Activity Index rose by 25% in March, and the Richmond Fed Equipment or Software Spending Conditions Index surged by 117% in April. Overall, the Index suggests that software investment growth should accelerate over the next six months.