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Construction equipment makers' earnings could signal economy's health

Thursday, July 16, 2009

Construction equipment makers release earnings reports soon.
Construction equipment makers release earnings reports soon.

Some of the largest manufacturers of construction equipment, farm equipment and other heavy equipment will be releasing quarterly earnings reports in the coming weeks, which Wall Street analysts said could signal the state of the broader economy.

Investors are hoping to see if the six-quarter long recession has finally reached its end, but expectations are low after last quarter's disappointing earnings reports.

Analysts said investors are looking for signs that the stimulus spending in the U.S. and abroad in countries like China is having an effect. Daniel Dowd at Bernstein Research said anecdotal evidence suggests that construction companies with exposure to paving and road building are optimistic about the stimulus package, according to Reuters.

Future indicators suggest that manufacturers expect conditions to improve over the next six months, according to the July Business Outlook Survey from the Federal Reserve Bank of Philadelphia.

The future general activity index remained positive for the seventh consecutive month, but decreased from June, when it was the highest since September 2003.

Indexes for future new orders and shipments decreased 12 points this month from June, the Fed report said.
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