US Capital Goods Demand: the figures of H1-2023
The favorable dynamics of automotive and construction equipment continues; fall for tools and equipment for ICT and services; the other segments slowed down sharply
Published by Marcello Antonioni. .
Slowdown Metal industry Industrial equipment Conjuncture Automotive Check performance Industries United States of America Uncertainty Global economic trends
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Pre-estimates for the second quarter of the year, processed by StudiaBo starting from the data US Census Bureau and available in ExportPlanning in the US Trade Datamart, allow us to document a picture of a slowdown in US demand for capital goods1, both with reference to the first quarter of the year and, above all, by comparing its performance with the average performance of last year.
On the US market, imports of capital goods from the world are significantly slowing down ...
In the April-June 2023 period US imports of capital goods from the world in fact showed a moderate growth trend in euro values (+4.5%) , significantly downsizing compared to the +13.1 percent trend in the first quarter of the year and, above all, compared to the +27.1 percent average 20222.
.. with tendential decreases in euros for instruments and equipment for industry and, above all, for ICT and services...
In the most recent quarter (April-June 2023), US imports from the world of tools and
equipment showed trend declines in euro values.
Notably, US demand (measured in terms of imports) for tools and equipment for ICT and services contracted by more than 10 points percentages in euro values compared to the corresponding quarter of 2022, with a balance sheet for the first half of 2023 showing a tendential fall of more than 9 percentage points (after the +27 per cent average in 2022).
Similarly, albeit to a lesser extent, in the first half of the year US imports of industry tools and equipment showed a trend reduction (-1.5% in euro values, compared to +22.7% of the 2022 average), due to the drop of more than 4 percentage points highlighted in the most recent quarter.
.. and with generalized downsizing
to most of the other sectors...
In the most recent quarter, also US imports from the world of electrical engineering, agricultural machinery, machinery for industrial processes and industrial engineering, while remaining in positive territory in euro values, all showed significant downsizing of their growth rate.
As the table below documents, the greatest slowdowns compared to the previous quarter were highlighted by industrial engineering (from +18.3 percent trend in the first quarter of the year to +0.4 % of the most recent quarter, after the +27.3% of the 2022 average), agricultural machinery (from +17.1 percent in the first three months of 2023 to +0.7% in the second quarter, after the exceptional +56.7 % of the 2022 average) and electrical engineering (+0.8% in the second quarter of 2023, after +14.7 percent in the first quarter of the year and, above all, after the +33.1 percent of the 2022 average).
On the other hand, the slowdown in US demand in the machinery for industrial processes sector is less intense, with imports that continue to show good trend growth in euro values (+7.8%), only slightly less dynamic than the previous quarter (+8.8%), even if decidedly reduced compared to the average growth rate of the 2022 average (+27.1%).
US Imports by capital goods sector
(% changes in euro)
| Y2022/ Y2021 |
Q1-'23/ Q1-'22 |
Q2-'23/ Q2-'22 |
H1-'23/ H1-'22 |
|
| Electrical Engineering | +33.1 | +14.7 | + 0.8 | + 7.2 |
|---|---|---|---|---|
| ICT and Service Equipment | +27.0 | - 8.5 | -10.2 | - 9.4 |
| Industrial Tools and Equipment | +22.7 | + 1.6 | - 4.3 | - 1.5 |
| Automotive | +23.4 | +48.2 | +29.6 | +38.2 |
| Earth-moving Machinery | +55.6 | +59.5 | +31.3 | +44.1 |
| Agricultural Machinery | +56.7 | +17.1 | + 0.7 | + 8.1 |
| Machinery for industrial processes | +27.1 | + 8.8 | + 7.8 | + 8.2 |
| Industrial Engineering | +27.3 | +18.3 | + 0.4 | + 8.7 |
| TOTAL Capital Goods | +27.1 | +13.1 | + 4.5 | + 8.5 |
Source: ExportPlanning - Data - Quarterly Trade Data, US Trade Datamart
.. with the only relevant exceptions
of automotive and earth moving machinery
In a strongly deteriorated context, even if still showing a moderate growth trend in euro values, US imports of automotive stand out for their still strongly expansive dynamics and earth moving machinery3.
In particular, in the second quarter of the year US imports from the world of automotive showed a trend increase in euro values of almost 30 percentage points, only a moderate deceleration compared to the first quarter ( +48.2%) and even at more favorable rates than the 2022 average (+23.4%).
Similarly, US imports from the world of earthmoving machinery recorded particularly dynamic growth in euro values in the most recent quarter, at levels of over 31 percentage points compared to the corresponding quarter of 2022, albeit decelerating compared to the first quarter of the year (+59.5%).
Conclusions
The data for the first half of 2023 appear to document the downsizing phase of the US market investment cycle, with imports of capital goods which in the most recent quarter showed moderate growth in euro-denominated values, but already in negative territory when measured in physical quantities5.
This downsizing is, however, rather uneven at an industry-level, with some ones - tools and equipment for ICT and services, above all - already in a recession and others, however, such as automotive and construction equipment, which continue to show broadly positive growth rates4.
In a context of slowdown in the international economy such as the current one6, it seems strategic for exporting companies in the consumer goods chain (but not only) to be able to constantly monitor the evolution of demand for your specific business area and for the most relevant markets (such as the United States7, but not only).
With the aim of allowing constant monitoring of the reference foreign markets, ExportPlanning has launched a new series of services, called Market Insights, which intends to specifically support market intelligence and budgeting processes of exporting companies.
1) The aggregate considered refers to the following sectors: electrical engineering, industrial machines and plants, tools and equipment for industry, tools and equipment for ICT and services, industrial plants, means of transport, earthmoving machines and agricultural machines.
2) Even when measured in physical quantities (weight), US imports of capital goods appear to be in sharp deceleration: from +15.9% of the 2022 average, in the first quarter of 2023 the trend variation fell to +3.1%, to then enter in negative territory in the second quarter of the year (pre-estimates): -3.1%. The overall balance of the first half of the year is substantially stable compared to the corresponding half year 2022 of US imports of capital goods measured in quantities by weight.
3) Various programs have been launched in the United States for the modernization of infrastructure and transport, which appear to be - at least in part - at the basis of the excellent performance of the transport means and earth-moving machinery sectors. In particular, the following programs are underway:
- American Jobs Plan: Proposed by the Biden Administration, the American Jobs Plan is an infrastructure investment plan, which aims to modernize the country's infrastructure, including transportation. This plan calls for an investment of more than $2 trillion in several areas, including road transport, public transport, electric cars, rail infrastructure, airports and ports;
- Infrastructure Investment and Jobs Act: is a bipartisan bill, which aims to invest more than 1 trillion dollars in the infrastructure of the United States. The plan covers a range of sectors, including transport, roads, bridges, ports, public transport, broadband and clean energy.
5) The slowdown of US demand of capital goods is surely also a reflection of the FED's progressively restrictive monetary policy, with interest rates rising significantly, from an average level of 0.6% in the first half of 2022 to an average of 4.8% in the first half of 2023.
6) Based on StudiaBo calculations, in the final balance of the first half of 2023, world trade in goods should record a year-over-year decline of around 6 percentage points, when measured at constant prices.
7) With over 780 billion euros of imports (equal to 18 percent of the world total), in 2022 the United States was largely the first destination market for world sales of capital goods.
