New Construction Equipment Orders up 15.6% from the Year-Ago Level

The lead indicator for the U.S. signifies an annual growth rate decline for the U.S. industrial sector into at least early 2023. However, new construction machinery orders were up by 15.6% above 2021 levels. At the same time, new, heavy-duty truck production has also increased. With the war in Ukraine continuing, the Europe Leading indicator moved lower in June.    

READ MORE: Third Quarter 2021 Continues to Show Strong Market Demand

View the corresponding Equipment Market Outlook charts for more data

NOTE: All data for charts supplied by ITR Economics

Europe Agriculture and Forestry Machinery Production [return to nav]

    • Annual European agricultural and forestry machinery production came in 3.4% above the year-ago level in May.
    • The Europe leading indicator and the ITR Checking Points system suggest more cyclical decline in at least the near term.          

    Europe Agriculture Machinery Production

    China Diesel Bus Production [return to nav]

      • The China Large diesel bus production annual total dropped from 20 thousand units in April to 18.9 thousand in May, a 5.6% decrease. Relative to one year ago, annual production is down 0.9%.
      • COVID-19 restrictions remain a hindrance to both demand and production.

      China Large Diesel Bus Production

      U.S. Industrial Production [return to nav]
      • Average U.S. industrial production in the second quarter was up 4.6% from the second quarter of 2021.
      • To combat inflation, the Federal Reserve is increasing the federal funds rate. Historically, interest rates have a multiyear lead time to industrial production. Rate hikes are likely not a cause for immediate concern for overall industrial production this cycle.

      Us Industrial Production

      U.S. OECD Leading Indicator [return to nav]

        • The U.S. OECD leading indicator raw data and monthly rate-of-change both decreased in June.
        • Given its average lead time of three months, the indicator monthly rate-of-change signals annual growth rate decline for the U.S. industrial sector into at least early 2023.

        Us Leading Indindicator

        U.S. Private Nonresidential New Construction [return to nav]
        • In the three months through May, U.S. private nonresidential construction came in 3.3% above the year-ago level. The historical data was revised by the U.S. Census Bureau.
        • Leading indicators such as the U.S. Commercial and Industrial Sector Architecture Billings Index suggest construction will grow at an accelerating pace into 2023.

        Us Private Nonresidential New

        U.S. Construction Machinery, New Orders [return to nav]
        • Annual U.S. construction machinery new orders in April totaled $38.9 billion, up 16.1% from the year-ago level; growth is slowing.
        • A cooling housing market, slowing macroeconomic growth and anticipated easing inflation beginning late this year will contribute to ongoing slowing growth in new orders in at least the coming quarters. 

        Us Construction Machinery New Orders

        U.S. Farm Machinery Production [return to nav]
        • U.S. farm machinery and equipment shipments in the 12 months through May came in 1.1% lower than one year ago.
        • Slowing growth in the global economy will help supply chains catch up with demand. This will in turn help producers to work through a backlog of demand for farm machinery.        

        Us Farm Machinery

        U.S. Total Public New Construction [return to nav]
        • U.S. total public new construction in the 12 months through May was 5.5% below the year-ago level. The historical data was revised by the U.S. Census Bureau.
        • The annual rate-of-change is negative but moving higher. This market tends to lag the macroeconomy, meaning further cyclical rise is likely ahead on the back of prior macro growth.        

        Us Total Public New Construction

        North American Rotary Rig Count [return to nav]
        • The annual North American rotary rig count in June averaged 771 rigs, 70.1% above the year-ago level. The annual growth rate was at a record high in May and then ticked down in June, marking a tentative transition to a slowing growth trend.
        • Oil and gas extraction capacity utilization rose to 97.6% in June suggesting investment in new rigs will be needed to expand production. However, environmental, social and governance investing is making funding difficult, and producers are hesitant to expand capacity because of the regulatory environment and price volatility.        

        North American Rotary Rig Count

        U.S. Defense Industry, New Orders [return to nav]
        • U.S. defense capital goods new orders in the 12 months through May were 1.4% lower than the same period one year prior.
        • Assistance to Ukraine could contribute to the rise, but a domestic focus on research-and-technology-oriented defense spending may dampen capital goods spending.

        Us Defense Capital

        U.S. Heavy-Duty Truck Production [return to nav]
        • Annual U.S. heavy-duty truck production was 4.8% above the year-ago level. Although the growth rate ticked up, production has been in a general slowing growth trend since March.
        • U.S. warehouses are reporting rising inventories relative to sales. The increase in this inventory ratio will impact demand for trucks used to transport goods and suggests slower growth for production.

        Europe Leading Indicator [return to nav]

          • The Europe Leading Indicator moved lower in June.
          • Ongoing business cycle decline in the Leading indicator monthly rate-of-change signals decline for the Europe Industrial production annual growth rate into at least early 2023. This is corroborated by cyclical decline in the Europe Manufacturing Purchasing Managers Index.        

          Europe Leading Indicator

          Germany Industrial Production [return to nav]
          • Germany industrial production in the three months through May came in 1.9% lower than the same period one year ago.
          • Although the growth rate ticked up in May, production has been in a general cyclical decline since mid-2021. A cooling global macroeconomy and corroborating leading indicator evidence point to more cyclical decline for at least the near term.      

          Germany Industrial Production