Econ Intro: US Industrial Production and Construction Machinery New Orders Above 2021 Levels.

While the leading indicators in both the U.S. and Europe declined, construction machinery new orders in the U.S. increased 11.9% above their level one year ago. In addition, in the three months through October, U.S. industrial production was 3.8% above the same period one year ago. With backorders prominent among manufacturers, this number is predicted to continue its increase.        

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

US Defense Industry, New Orders [return to nav]

    • The U.S. defense capital goods new orders annual growth rate was at 3.8% in August
    • Dollar-denominated new orders are rising but will be subject to some downside pressure via declining commodity prices, such as steel and copper.

    Us Defense Capital Goods New Orders

    US Construction Machinery, New Orders [return to nav]
    • U.S. construction machinery in the 12 months through August was 13.9% above the year-ago level. The pace of rise is slowing.
    • Rising interest rates may hinder investment in construction and related machinery, putting down-side pressure on demand for new orders.

    Us Constr Machinery New Orderss

    Germany Industrial Production [return to nav]
    • Quarterly Germany industrial production is generally declining, as of August down 0.9% from the year-ago level.
    • Leading indicator evidence and a cooling global macroeconomy suggest that further business cycle decline is in store for industrial production. Nascent recovery in the automotive sector will likely contribute upward pressure in the near term.

    Germany Industrial

    Europe Agriculture and Forestry Machinery Production [return to nav]

      • The Europe agricultural and forestry machinery production annual growth rate came in at 2.8% in September.
      • Accelerating growth is likely in the near term as supply chain limitations gradually improve. However, the conflict in Ukraine remains a risk.

      Graphs Europe Agriculture Machinery Production 

      China Diesel Bus Production [return to nav]

        • Annual China large diesel bus production was 27.4% below the year-ago level in September.
        • The quarterly rate-of-change, at -3.3%, is above the annual rate-of-change and rising. This suggests the production annual rate-of-change will likely transition to rise in the near term.

        Graphs China Large Diesel Bus Production

        U.S. Industrial Production [return to nav]
        • In the three months through October, U.S. industrial production was 3.8% above the same period one year ago.
        • U.S. total manufacturing unfilled orders suggest that manufacturers have backlogs to work though. Although there is a risk of order cancellation on the back side of the business cycle, backlogs will likely support growth in U.S. manufacturing in the coming quarters.

        Graphs Us Industrial Production        

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

          • The monthly raw data and monthly rate-of-change for the U.S. OECD leading indicator decreased in October. The monthly rate-of-change has been declining for 18 months.
          • Trends in the Indicator suggest downward cyclical movement in U.S. Industrial Production will persist into at least the middle of 2023.

          Graphs Us Oecd Leading Indicator

          U.S. Private Nonresidential New Construction [return to nav]
          • U.S. private nonresidential new construction totaled $137.1 billion in the third quarter, up 9.3% from the same period one year ago.
          • Nonresidential construction typically lags the overall U.S. economy. The economic boom in 2021 and early 2022 should translate to accelerating growth for construction in the next few quarters. Elevated materials and labor prices will contribute to a rise in dollar-denominated construction.

          Graphs Us Private Nonresidential New Construction        

          U.S. Construction Machinery, New Orders [return to nav]
          • U.S. construction machinery new orders in the 12 months through September totaled $41.4 billion, 11.9% above the same period one year ago.
          • U.S. steel scrap prices have dropped to levels last seen in late 2020 and are declining. Lower prices could yield a margin-improvement opportunity for producers. If demand softens, however, and buyers pressure producers to pass along their savings, lower prices could negatively impact dollar-denominated new orders.

          Graphs 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 September were 1.7% above the year-ago level, a downtick from last month’s annual growth rate of 2.9%.
          • Rising interest rates will increase financing costs for those purchasing new farm machinery and may be a downside factor for demand. However, elevated backlogs suggest the farm machinery market will rise further.
          • Graphs Us Farm Machinery And Equipment Supplies        
          U.S. Total Public New Construction [return to nav]
          • Annual U.S. total public construction rose in September but was 0.6% below the September 2021 level. Construction will likely rise above year-ago levels in the near term.
          • The U.S. Infrastructure Investment and Jobs Act, passed in 2021, will positively impact public construction. The timing of the impact remains opaque.

          Graphs Us Total Public New Construction

          North American Rotary Rig Count [return to nav]
          • The North America rotary rig count in the 12 months through October came in 53.7% above the same period one year ago.
          • The U.S. oil and gas extraction capacity utilization rate were tight in October, at 97.3%. Tight capacity indicates a need to increase drilling, but macrotrends signal rise in the rig count will likely occur at a slowing pace.

          Graphs 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 September came in at a record-high $163.1 billion, 2% above the same period one year ago.
          • In October, the U.S. committed additional funds to military assistance for Ukraine, boding well for new orders. ITR Checking Points suggest new orders will accelerate in growth in at least the near term.

          Graphs Us Defense Capital Goods New Orders

          U.S. Heavy-Duty Truck Production [return to nav]
          • U.S. heavy-duty truck production in the 12 months through October was 13% above the same period one year ago.
          • The U.S. transportation services freight index annual average reached a record high in September. Despite record-high freight volume, pricing trends suggest truckers are feeling pressure on their profits.

          Graphs Us Heavy Duty Truck Production        

          Europe Leading Indicator [return to nav]

            • The Europe leading indicator declined in October on both a raw data and monthly rate-of-change basis.
            • The leading indicator points to rate-of-change decline in European industrial production into at least mid-2023.

            Graphs Europe Leading Indicator        

            Germany Industrial Production [return to nav]
            • Germany industrial production in the third quarter of 2022 came in flat relative to the preceding quarter but 1.4% higher than the third quarter of 2021.
            • Slowing global growth will likely impact Germany’s export-heavy economy. The leading indicator evidence points to an economic slowdown into at least the middle of 2023. 

            Graphs Germany Industrial Production