US MACHINERY NEW ORDERS UP MORE THAN 17% & TRUCK PRODUCTION INCREASED.

Elevated interest rates may affect many of the indicators further into 2023. Many of these indicators and data for this article are on upward trends. However, fears of a recession and several bank failures with increasing interest rates may stall growth. Learn more from this report.

• The U.S. OECD leading indicator declined in February. The monthly rate of change has moved higher in recent months, but more data would be needed to confirm a shift in momentum.

• The indicator suggests that downward pressure on the U.S. economy will persist into at least the latter half of this year.

QUESTIONS?

US Industrial Production

• In the three months through February, U.S. industrial production came in 0.4% higher than during the same period one year ago.

• Recent bank failures, in part because of a failure to hedge interest rate movement, have made headlines. The situation appears to have stabilized but likely means that tighter borrowing conditions are ahead for businesses.

US Private Nonresidential New Construction US Total Public New Construction

• U.S. private nonresidential new construction in the three months through January was 19.7% higher than it was for the same period one year ago.

• As the nonresidential sector lags the macroeconomy by roughly one year, the early-2022 growth rate peak in the U.S. economy suggests a growth rate peak for construction is likely approaching.

• U.S. total public construction totaled $366.4 billion in the 12 months through January, up 6% from one year prior.

• Trends in the quarterly growth rate suggest accelerating growth for construction in at least the near term.

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US Farm Machinery Production Europe Ag & Forestry Machinery Production

• In the 12 months through January, U.S. Farm Machinery and Equipment Shipments totaled $30.1 billion, down 3.5% from the same period one year ago.

• U.S. Farm Proprietors Income (with inventory valuation adjustments) tentatively ticked down from a late-2022 record high. While high Income bodes well for the ability to invest in machinery, elevated interest rates and lower commodity prices are downside pressures.

• In January, annual European agricultural and forestry machinery production was 6.3% more than the year-ago level.

• Ukraine officials have stated that they expect grain production to be lower this year because of the war in their country. The war may negatively impact demand for agricultural machinery.

Europe Leading Indicator

• Monthly data for the four big European nations (France, Germany, Italy, and U.K.) leading indicator has been relatively flat since October. The monthly rate of change has risen for the last four months.

• The indicator trend could be a sign of an upcoming cyclical trough for the European economy. However, tightening monetary conditions and volatility in the banking sector could mean a more prolonged period of cyclical decline.

US HeavyDuty Truck Production Germany Industrial Production

• U.S. heavy-duty truck production in the 12 months through February was 12.7% higher than one year prior.

• Flat freight activity, declining freight rates and elevated interest rates will likely hinder demand in the coming quarters.

US Mining Production

• Annual U.S. mining production in February was 7.6% above the year-ago level.

• Performance varies by component. Mining excluding oil and gas is declining, and oil and gas production growth is slowing.

• For the three months through January, German industrial production came in essentially even when compared with the same three months one year ago.

• Recent increases in equity prices in Germany signal some upside potential for the German economy. However, the high interest rate environment and cooling global demand ultimately suggest further cyclical decline for production.

US Construction Machinery, New Orders US Defense Industry, New Orders

• U.S. construction machinery new orders in the 12 months through January totaled $44.5 billion, up 17.9% from the same period one year ago.

• Elevated interest rates will likely impact this market via reduced demand from the residential sector and higher financing costs.

NUS Mining & Oil Field Machinery Production Index

• Annual U.S. mining and oil field machinery production in February was up 6.7% from the year-ago level. Production has tentatively transitioned to a slowing growth trend.

• With economic demand slowing, and oil and gas production in a slowing growth trend, it is likely that demand for mining and oil field machinery will slow; expect more rate-of-change decline this year.

• Annual U.S. defense capital goods new orders was 10.9% above the year-ago level in January.

• Rising geopolitical tensions and trends in the new orders quarterly growth rate signal that accelerating growth will continue in at least the near term.

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