Agricultural Machinery
Investment in Agricultural Machinery increased 44% (annualized) in Q1 2024 and is now 10% above its year-ago level. The Agriculture Momentum Index held steady at 109.6 in in May. In March, tobacco exports increased 77% month-over-month, while “narrow money” (M1) monetary aggregates increased slightly. Based on the Index’s current position and recent movement, annual growth in agriculture machinery investment is expected to remain positive over the next two quarters.
Construction Machinery
Investment in Construction Machinery ticked down 2.9% (annualized) in Q1 2024 and is 0.9% above its year-ago level. The Construction Momentum Index fell sharply from 114.2 in April to 108.5 in May. In March, transportation construction spending weakened 0.7% on a monthly basis, while new privately-owned housing starts decreased 15% M/M. Overall, movement in the Index over recent months suggests that annual investment growth in construction machinery will remain weak and may contract over the next two quarters.
Materials Handling Equipment
Investment in Materials Handling Equipment increased 10% (annualized) in Q1 2024 and is 3.4% above year-ago levels. The Materials Handling Momentum Index held steady at 90.5 in May. In February, trade for warehouse clubs & superstores improved 0.9%, while manufacturing payrolls ticked up in April (+0.1%). Overall, the Index’s recent movement suggests that annual investment growth in materials handling equipment will remain positive over the next six months.
Other Industrial Equipment
Investment in All Other Industrial Equipment increased 23% (annualized) in Q1 2024 and is slightly above year-ago levels (+0.3%). The Other Industrial Equipment Momentum Index increased from 87.8 in April to 88.7 in May. In March, non-residential construction spending ticked down, while total industrial production increased 0.4%. Overall, the Index’s position and recent movement suggest that annual investment growth in other industrial equipment is unlikely to improve over the next six months and may turn negative.
Medical Equipment
Investment in Medical Equipment decreased 4.6% (annualized) in Q1 2024 but is up 1.2% on a Y/Y basis. The Medical Equipment Momentum Index fell sharply from 109.0 in April to 104.5 in May. In March, the CPI for medical care increased 0.6%, while the market cap for Medtronic declined 7.0% M/M. Overall, the Index’s current position and recent movement continues to suggest improved Y/Y growth in medical equipment investment over the next six months, but this month’s sharp decline is worth monitoring.
Mining & Oilfield Machinery
Investment in Mining & Oilfield Machinery decreased 21% (annualized) in Q1 2024 and is down 4.5% from year-ago levels. The Mining & Oilfield Machinery Momentum Index fell from 94.3 in April to 89.3 in May. Mining and logging payrolls declined in April, while the EIA for coal production weakened 5.2% in March. Overall, the Index suggests that annual growth in mining & oilfield machinery investment will remain negative over the next six months.
Aircraft
Investment in Aircraft decreased at a 79% (annualized) rate in Q1 2024 and decreased by 20% on an annual basis. The Aircraft Momentum Index ticked down from 100.8 in April to 100.0 in May. Exports of computers and electronic products weakened in March by 13.6% while the ISM New Orders Index decreased 4.0%. Overall, the Index suggests little change in aircraft investment growth over the next two quarters.
Ships & Boats
Investment in Ships & Boats fell at a 19% annualized rate in Q1 2024 and is 19% below its year-ago level. The Ships & Boats Momentum Index increased from 97.6 to 99.2 in May. In April, the ISM Purchase Managers Index weakened 3.9% M/M, while industrial production of ships & boats improved 3.0% in March. Overall, the Index’s recent movement and current position suggest that annual growth in ships & boats investment should begin to bounce back over the next two quarters after a prolonged 18-month slide.
Railroad Equipment
Investment in Railroad Equipment decreased 17% (annualized) in Q1 2024 and is down 9.2% year-over-year. The Railroad Equipment Momentum Index decreased from 97.6 to 92.9 in May. In March, capacity utilization for transportation equipment improved on a monthly basis, while rail carloads of farm & food products worsened 3.3%. Overall, the Index points to continued sluggishness in railroad equipment investment growth over the coming six months.
Trucks
Investment in Trucks increased 4.2% (annualized) in Q1 2024 and is 5.2% above year-ago levels. The Trucks Momentum Index increased from 88.9 in April to 92.9 in May. In March, capacity utilization of furniture and related products improved while estimated raw steel production ticked down (-0.2%) in April. Overall, the Index indicates that annual investment growth in trucks should remain positive over the next six months, and may accelerate.
Computers
Investment in Computers increased 44% (annualized) in Q1 2024 and is up 11.2% on a year-over-year basis. The Computers Momentum Index increased from 103.4 to 105.1 in May. In March, new orders on computers & electronic products increased 0.7%, while the value of shipments of communication equipment grew 0.6%. Overall, the Index’s current position and recent movement point to stronger year-over-year investment growth in computers over the next six months.
Software
Investment in Software rose 11% (annualized) in Q1 2024 and is up 8.8% from a year prior. The Software Momentum Index ticked up from 89.1 to 90.6 in May. In April, the unemployment rate worsened, while spending on equipment and software as measured by the Richmond Fed’s Survey of Business Activity improved. Overall, while the Index’s current position and recent movement are not as strong as they were following the pandemic, it continues to suggest positive investment growth in software over the next two quarters.
