If you’re looking for a chart that illustrates a long-term, worldwide industrial slowdown, look no further than Caterpillar’s monthly sales figures.
The industrial giant’s sales have now declined for 35 straight months, with October’s 16% decline coming in as the largest drop during this streak and the biggest monthly decline since February 2010.
In October, the monthly slowdown was seen across regions and industries, with sales falling against the prior year period in each of Caterpillar’s four global regions and three main industries. The most pronounced slowdowns were in construction sales in Latin America, where sales fell 41% in October, and resources industry sales — basically mining and oil equipment — fell 37% in Asia.
But as has been the case with Caterpillar for the last several years, news about Caterpillar is really seen as news about China. Back in September, Caterpillar cut 10,000 jobs just after announcing its monthly sales figures (which, of course, weren’t great), with the company citing a “convergence of challenging marketplace conditions.”
And in a note to clients on Thursday, analysts at Bespoke wrote that, “The global mining and construction business has been in a funk due to the crash in commodity prices, the slowdown in China, and the strong dollar, and the monthly machinery sales totals from Caterpillar really put these declines into perspective.”
Of course, the big story for the last year has been that China’s economy is doing two things: slowing down and transitioning from an industrial-based to consumer-based economy.
So on the one hand, you’d expect there to be a slowdown in construction equipment.
On the other hand, it’s hard for this chart to do anything but make things look absolutely terrible in China — and the world.
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