The report released this month by the Equipment Leasing and Financial Association Foundation Agency’s "U.S. Equipment and Software Investment Momentum Monitoring" report shows that the five major markets for construction equipment dealers have all experienced different degrees of decline. According to the report data: According to the year-on-year monitoring results of the construction, agriculture, mining, material handling and truck markets, the truck investment rate fell by 41%, followed by construction equipment, which fell by 27%.
The index is published monthly and is based on a series of customized leading indicators in 12 vertical markets developed by Keybridge LLC for equipment leasing and financial foundations. It aims to indicate the direction and magnitude of equipment investment growth in the next six months.
ELFF's October vertical market overview includes:
Construction machinery: The investment in construction machinery fell 44% year-on-year in the second quarter of 2020 and 27% year-on-year. The construction momentum index rose from 80.2 in September (revised) to 83.5 in October, but ELFF said it was still abnormally weak. In August, private housing under construction rose by 1.5%, and the commercial property price index fell by 14 points from February. ELFF said: "Overall, the index shows that construction machinery investment will continue to be weak in the next one to two quarters, but the recent trend is encouraging."
Mining and oilfield machinery: Investment in this industry fell at an annualized rate of 55% in the second quarter of 2020, which was a 13% decline compared to the same period in 2019. The momentum index of mining and oilfield machinery increased from 68.8 (revised) in September to 73.4 in October. The association said: “In general, the index points to potential improvements in mining and oilfield investment growth in the next six months, although the global economic recession may still be a major obstacle to energy demand.”
Agricultural machinery: Investment in the second quarter of 2020 fell by 39% (annualized), down 16% from a year ago. The agricultural kinetic energy index increased from 90.3 (revised) in September to 93.3 in October. In August, the M1 money supply increased by 1.2%, but the production of lamb and mutton fell by 11%, the largest monthly decline since the end of 2019. Overall, the index indicates that agricultural machinery investment growth may have reached a turning point and should begin to improve, ELFF said in the next six months.
Material handling equipment: The annual rate of investment in the second quarter of 2020 decreased by 13%, and a year-on-year decrease of 7.3%. The material movement volume index rose from 70.2 (revised) in September to 73.0 in October. Energy consumption in the industrial sector fell by 1.9% in June, while spending on private warehouse construction fell by 0.8% in August. ELFF expects that in the next six months, investment in material handling equipment will continue to shrink.
Trucks: By the second quarter of 2020, the annualized growth rate of investment will be 82%, which is 41% lower than the same period in 2019. The truck momentum index soared from 84.7 (revised) in September to 96.6 in October. Manufacturers' inventories of light trucks and utility vehicles fell by 1.3% in July. However, freight revenue increased by 1.4% in August. ELFF said that the overall indicators indicate that truck investment may recover in the next two quarters.
