The deterioration of US demand for investment goods in 3Q 2023
All major sectors down trend, except automotive and earth-moving machinery
Published by Marcello Antonioni. .
Slowdown Metal industry Industrial equipment Conjuncture Industries United States of America Uncertainty Global economic trends
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The pre-estimates for the 3rd quarter of 2023, developed by StudiaBo starting from the data US Census Bureau and available in ExportPlanning in the US Trade Datamart, allow us to document a marked deterioration in US demand for investment goods 1.
US imports of investment goods negative for the first time after 11 consecutive quarters of growth...
In the third quarter of the year, US imports of investment goods recorded a negative trend change for the first time in euro values (-4.4 percent2) after eleven quarters of trend increases.
In cumulative annual terms (January-September 2023 compared to January-September 2022) US imports of investment goods maintain, indeed, a - albeit moderately - positive balance (+3.7% in euro values), but there is no doubt the slowdown compared to the first half of the year (which had recorded a trend increase of +8.4%).
The table below documents the recent trends in US imports for the various sectors of investment goods.
US Imports by capital goods sector
(% changes in euro)
| Y2022/ Y2021 |
H1-'23/ H1-'22 |
Q3-'23/ Q3-'22 |
YTD-2023/ YDT-2022 |
|
| Electrical Engineering | +33.1 | + 6.9 | - 6.0 | + 2.1 |
|---|---|---|---|---|
| ICT and Service Equipment | +27.0 | -12.6 | -22.1 | -16.2 |
| Industrial Tools and Equipment | +22.7 | - 2.1 | -11.3 | - 5.4 |
| Automotive | +23.4 | +43.2 | +25.6 | +36.7 |
| Earth-moving Machinery | +55.6 | +46.7 | +22.4 | +37.5 |
| Agricultural Machinery | +56.7 | + 6.0 | -13.5 | + 0.6 |
| Machinery for industrial processes | +27.1 | + 7.3 | - 8.6 | + 1.7 |
| Industrial Engineering | +27.3 | + 8.5 | - 2.3 | + 4.6 |
| TOTAL Capital Goods | +27.1 | + 8.4 | - 4.4 | + 3.7 |
Source: ExportPlanning - Data - Quarterly Trade Data, US Trade Datamart
.. with relevant y-o-y declines for agricultural machinery, tools and equipment for industry and for ICT and services...
In the most recent quarter (July-September 2023) US imports from the world recorded double-digit percentage declines in euro values in the tools and equipment for ICT and services sectors (-22.1%, after the already negative first half of the year [-12.6%]), agricultural machinery (-13.5%, which interrupts a growth phase [+6% trend in the first half]) and tools and equipment for industry (-11.3%, after -2.1% in the first half of the year).
.. moderate (but significant) declines for electrical engineering, machinery and industrial plant engineering...
On the other hand, the trend declines in the most recent quarter for US imports of electrical engineering (-6%, after +6.9 for percent of the first half of the year), machinery (-8.6%, after +7.3 percent of the first half of the year) and industrial engineering (-2.3%, after +8.5 percent in the first six months of the year) are more moderate.
.. while the expansionary phase of US demand for automotive and earthmoving machinery continues.
In a highly deteriorated context, although still showing moderate growth in cumulative annual values, US imports of automotive and earth-moving machinery stand out due to their still highly expansionary dynamics3.
In particular, in the third quarter of the year, US imports from the world of automotive showed a trend increase in euro values of almost 26 percentage points, only a moderate deceleration compared to the first half (+43.2%) and even at more favorable rates than the 2022 average (+23.4%).
A significant contribution to the growth in US demand for means of transport came from the segment of the electric car (electric or hybrid engine), whose US imports have shown an exponential increase, reaching a new maximum point in the most recent quarter (around 10 billion euros on a quarterly basis, equal to almost 33 billion on an annual basis).
Similarly, US imports from the world of earth-moving machinery confirmed particularly dynamic growth in euro values in the most recent quarter, at levels of over 22 percentage points compared to the corresponding quarter of 2022, also if decelerating compared to the first half of the year (+46.7%).
In conclusion: the slowdown is evident,
but uneven at the product level
The data for the third quarter of 2023 clearly documents the downsizing phase of the investment cycle of the US market.
This slowdown is certainly also a reflection of the progressively restrictive monetary policy of the American Federal Reserve, with interest rates growing significantly, from an average level of 0.6% in the first half of 2022 to an average of 5.3% in the third quarter of 2023.
The slowdown in US demand for investment goods is, however, rather uneven at the product level, with some sectors - tools and equipment for ICT and services, above all - already in a recessionary phase in the first part of 2023 and others, however, such as the automotive and earth-moving machinery sectors, which continue to show largely positive growth rates.
In a context of rapid changes in the demand framework, the need for exporting companies to monitor the markets of interest for their specific business area
In a context of international economic slowdown like the current one, it seems strategic for exporting companies in the domestic goods supply chain (but not only) to be able to constantly monitor the evolution of demand for their specific area of business and for the most relevant markets (such as the US one, but not only).
With the aim of allowing constant monitoring of the reference foreign markets, ExportPlanning provides the new on-demand service called Market Insights, which intends to specifically support the market intelligence and budgeting processes of exporting companies.
