Industry-leading economic firm ITR Economics provides heavy-duty equipment market trends to help OEMs stay up to date on top industry information and insights, which can help them make better decisions in 2023 and beyond.
In our continued analysis, this month’s data shows that annual U.S. Construction Machinery New Orders hit a record high, up 11.5% above the year-ago level. However, while New Orders, a dollar-denominated dataset, are at record highs, annual U.S. Construction Machinery Production – a measure of the level of production activity – is moving lower from a tentative May 2023 peak.
The following provides a summary of key observations across 13 indicators and areas of industry that contribute to today's global economic conditions.
The monthly rate of change for the U.S. OECD Leading Indicator rose in September.
While this indicator may point toward a near-term low for the U.S. Industrial Production annual growth rate, a later low is more probable due to the lagged effects of contractionary monetary policy.
Four Big European Nations Leading Indicator
The Four Big European Nations Leading Indicator monthly rate of change rose further in September.
Europe Industrial Production, however, is showing signs of further decline, not recovery. The annual average is 0.6% above the year-ago level, but the quarterly average is now 2.5% lower than the same period last year.
US Construction Machinery New Orders
Annual U.S. Construction Machinery New Orders totaled $48.4 billion in August, 11.5% above the year-ago level. New Orders are at a record high.
While New Orders, a dollar-denominated dataset, are at record highs, annual U.S. Construction Machinery Production – a measure of the level of production activity – is moving lower from a tentative May 2023 peak.
US Mining & Oil Field Machinery Production Index
Annual U.S. Mining and Oil Field Machinery Production remains relatively flat with a slight downward trajectory.
Mounting macroeconomic headwinds both in the U.S. and abroad are likely to cool demand for mined materials in the coming quarters. However, tensions in the Middle East could benefit the domestic oil and gas industry.
US Industrial Production
U.S. Industrial Production in the third quarter was 0.2% above the third quarter of 2022. Quarterly Production has been relatively flat over the last year but is likely to begin declining in the near term.
The prior environment of rising interest rates is putting pressure on the macroeconomy and will result in recession for Annual Production in the near term. We anticipate the recession will be mild due to promising consumer balance sheets and a strong labor market.
US Farm Machinery & Equipment Shipments
U.S. Farm Machinery and Equipment Shipments in the 12 months through August were 20.6% below the year-ago level.
Declining U.S. Farm Proprietor Income suggests downward pressure on this market in at least the near term.
US Heavy-Duty Truck Production
U.S. Heavy-Duty Truck Production in the 12 months through September was 9.0% above the year-ago level.
Annual Production ticked down in September. Production may resume rise for a time, but a near-term peak is probable given the condition of the freight market as the macroeconomy loses momentum.
US Defense Capital Goods New Orders
Annual U.S. Defense Capital Goods New Orders in August totaled $165.9 billion, 14.7% above the year-ago level. New Orders are in a tentative slowing growth trend.
Stock prices for major defense companies portend further decline in the annual growth rate in the coming quarters. Recent conflict in the Middle East and ongoing conflict in Ukraine could bolster this sector.
US Private Nonresidential New Construction
U.S. Private Nonresidential Construction in the three months through August totaled $172.2 billion, 20.1% above the year-ago level. The quarterly growth rate has just started to move lower.
Contraction in the residential construction market suggests downward pressure on the construction of shopping centers, water and sewer facilities, and hospitals, all of which are typically built to support new households.
US Total Public Construction
Annual U.S. Total Public Construction in August came in at $408.9 billion, 11.9% above the year-ago level.
Annual Construction is in an accelerating growth trend that will likely persist in the near term, though the Institutional Sector Architecture Billings Index suggests slowing growth on the horizon.
US Mining Production
Annual U.S. Mining Production was 6.0% above the year-ago level in September and is generally slowing in growth.
Recent trends in the US Mining Capacity Utilization Rate suggest that growth will continue to slow in the coming quarters.
Germany Industrial Production
Germany Industrial Production in the three months through August was 0.7% below the same period one year ago.
Tighter monetary policy in Europe and its trade partners, such as the US and Canada, may continue to hamper demand for Production in the coming quarters.
Europe Agricultural & Forestry Machinery Production
Annual Europe Agricultural and Forestry Machinery Production declined in August but was still 8.6% above the year-ago level.
The quarterly Production trend has dropped 3.1% below the year-ago level, indicating downward momentum in this market.