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 11% (annualized) in Q2 2019 and eased 0.3% from one year ago. The Agriculture Momentum Index improved from 97.9 (revised) in September to 98.7 in October, the highest level since late 2018. Wholesale Trade of Miscellaneous Durable Goods improved 0.7% in July, and Shipments of Farm Machinery & Equipment rose 3.2% in August. Overall, the Index continues to point to improved agricultural machinery investment growth over the next three to six months.

Construction Machinery

Investment in Construction Machinery grew at a 14% annualized rate in Q2 2019 and is up 5.3% year-over-year. The Construction Momentum Index increased from 91.5 (revised) in September to 93.1 in October. In August, New Privately-Owned Houses increased 10%, while Shipments of Construction Machinery rose 8.0%, the strongest growth since July 2012. Overall, the Index suggests moderate growth in construction machinery investment over the next three to six months.

Materials Handling Equipment

Investment in Materials Handling Equipment dropped at an 11% annualized rate in Q2 2019 and is down 1.4% year-over-year. The Materials Handling Momentum Index rose from 75.5 (revised) in September to 77.6 in October but remains weak by historical standards. Total Energy Consumption fell 3.2% in June, while the Chicago Business Barometer decreased 6.5% in September. Overall, the Index points to continued weakness in handling equipment investment growth over the next two quarters.

Other Industrial Equipment

Investment in All Other Industrial Equipment increased at an 8.9% annualized rate in Q2 2019 and improved 4.8% from a year ago. The Other Industrial Equipment Momentum Index inched up from 91.5 (revised) in September to 92.9 in October. Industrial Production for Total Machinery increased 1.6% in August, while Nonfarm Payrolls edged up 0.1% in September. Overall, the Index continues to suggest modest growth in industrial equipment investment over the next three to six months.

Medical Equipment

Investment in Medical Equipment increased at an 11% annualized rate in Q2 2019 and is up 5.1% year-over-year. The Medical Equipment Momentum Index held steady at 92.5 from September (revised) to October. In August, the Consumer Price Index for Dental Services rose 0.3%, while the Consumer Price Index for Medical Care Services rose 0.9%, the fastest growth in three years. Overall, the Index points to stronger growth in medical equipment investment over the next two quarters.

Mining & Oilfield Machinery

Investment in Mining & Oilfield Machinery surged at a 32% annualized rate in Q2 2019 but remains down 7% year-over-year. The Mining & Oilfield Machinery Momentum Index held steady at 98.3 from September to October. Motor Gasoline Production decreased 1.1% in July, but Industrial Production for Natural Gas Distribution rose 0.5% August. Overall, the Index points to continued weakness in mining & oilfield machinery investment growth over the next three to six months.

Aircraft

Investment in Aircraft fell 43% (annualized) in Q2 2019 and is down 25% on a year-over-year basis. The Aircraft Momentum Index edged up from 95.8 (revised) in September to 96.6 in October. In August, Civilian Aircraft Exports dropped 33%, the fifth double-digit decline in the past year, and Manufacturers' Inventories of Defense Capital Goods pulled back 1.2%. Overall, the Index points to continued negative growth in aircraft investment over the next two quarters.

Ships & Boats

Investment in Ships & Boats declined at an annualized rate of 33% in Q2 2019 and is down 3.5% year-over-year. The Ships & Boats Momentum Index slipped from 103.5 (revised) in September to 98.3 in October. Houston Shipping Container Traffic eased 0.3% in August, while the ISM Manufacturing Employment Index fell 1.1 points in September, the ninth decline in the past year. Overall, the Index’s movement this year — and particularly over the last quarter — suggests that ships and boats investment growth will remain weak over the next three to six months.

Railroad Equipment

Investment in Railroad Equipment accelerated at a 35% annualized rate in Q2 2019 and is up 10% year-over-year. The Railroad Equipment Momentum Index eased from 71.4 (revised) in September to 69.9 in October, the lowest level since July 2016. In September, Rail Carloads of Petroleum Products fell 5.0%, the sixth decline in the past year, while Rail Carloads of Metallic Ores & Metals fell 5.5%. Overall, the Index continues to suggest weaker growth in railroad equipment investment over the next three to six months.

Trucks

Investment in Trucks edged up at a 0.6% annualized rate in Q2 2019 and is up 7.2% from year-ago levels. The Trucks Momentum Index pulled back slightly from 106.6 (revised) in September to 105.8 in October. In August, Earnings for Freight Trucking rose 0.9%, and Manufacturers' Inventories of Light Trucks & Utility Vehicles increased 2.5%, the strongest growth since January. Overall, the Index continues to suggest positive growth in trucks investment over the next three to six months.

Computers

Investment in Computers surged at an annualized rate of 35% in Q2 2019 and is up 8.3% year-over-year. The Computers Momentum Index eased from 97.5 in September to 95.8 in October, its lowest reading in over three years. New Orders for Electromedical Products decreased 1.0% in August, and the ISM Manufacturing PMI dropped 1.3 points in September, the sixth consecutive decline. Overall, the Index points to slower growth in computers investment over the next two quarters.

Software

Investment in Software improved at a 5.8% annualized rate in Q2 2019 and is up 10% year-over-year. The Software Momentum Index held steady at 98.3 from September (revised) to October, maintaining the highest level since April 2018. In September, the Nasdaq Composite Index increased 0.5% and IBM's Market Cap increased 7.3%. Overall, the Index points to continued moderate growth in software investment over the next two quarters.