An international construction giant has some depressing news about the global economy

Caterpillar does not have a cheery outlook for the global economy.

In its second quarter earnings report released Thursday morning, Caterpillar, a $US48 billion international manufacturer of construction equipment and other heavy machinery, said that the global economy is “stagnant.”

Caterpillar CEO Doug Oberhelman said in a release:

While economic conditions in the United States are modestly positive, the global economy remains relatively stagnant. Many of the key industries we serve remain weak, and we haven’t seen sustained signs of improvement. Continuing economic weakness in China and Brazil, as well as uncertainty in the Eurozone and over Greece, haven’t helped confidence. Prices for commodities like coal, iron ore and oil are not signalling an improvement in the short term.

So, except for the US economy’s “modestly positive” outlook, everything that Caterpillar is looking out at is simply bad and depressing.

And this matters because Caterpillar is seen as a bellwether of economic activity given that its machines are big, expensive, and used in the kinds of projects — highway construction, large housing developments, mining projects — to which companies and governments are only likely to commit if they’re confident in the economic outlook and their financial standing.

This news from Caterpillar also follows Apple’s earnings report earlier this week, which in the eyes of at least one analyst confirmed what is, perhaps, everybody’s biggest fear about the global economy: a major slowdown in China. Caterpillar, for its part, saw “continuing economic weakness in China,” which runs a bit counter to official government data out of China that indicates GDP growth held up better than expected.

Other measures from China, including auto sales and commentary from other large US companies, have not painted a pretty picture.

Caterpillar’s report also doesn’t paint a pretty picture for commodities, which have been getting demolished in recent weeks, with notable declines in oil and gold also accompanied by copper prices slumping to a six-year low, iron ore getting smoked, and the Bloomberg Commodity Index touching a 13-year low.

On Wednesday, we highlighted Caterpillar’s latest machine sales report, which was also a downbeat report showing sales declining across most all of its segments in most all of its sales regions (natural resource equipment sales were up 1% in its Europe, Africa, and Middle East segment in June, the only positive reading).

And Thursday’s earnings report didn’t really change that story.

As for the company’s second quarter, Caterpillar reported adjusted earnings per share of $US1.27 on revenue of $US12.3 billion. Analysts were looking for earnings per share of $US1.26 on revenue of $US12.8 billion, according to Bloomberg.

Against the prior year, revenue was down 13%.

In pre-market trade on Thursday, shares of Caterpillar were down 2.5% to around $US77.70, their lowest since 2011.

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