Caterpillar Machinery Sales Still Weak

COTD Bullet Points:

  • Caterpillar machinery sales for January grew just 9% y/y, the lowest rate of growth since June 2017.
  • North America bucked the trend in January as the only region to show an acceleration in its rate of y/y growth to 20%.
  • Sales in Asia actually swung to a decline of 4%, making it the only region with negative growth.

Chart of the Day:

Shares of Caterpillar (CAT) have had a tough time recovering from their Q4 swoon as the stock continues to struggle with resistance in the $135 range.

(Click on image to enlarge)

Slower sales of machinery is one factor behind the weakness in the stock. Sales figures for the month of January were released earlier this morning and showed a deceleration in worldwide three-month average y/y sales, falling from 10% down to 9%. That’s the slowest rate of sales growth since June 2017 and the seventh consecutive month where y/y sales growth saw a sequential decline. Since our dataset begins in 2009, this is the longest such stretch of monthly declines.

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While global sales growth is still at 9%, it masks a much weaker picture around the world. The chart below shows y/y sales growth broken out by region, and at 20%, North America is clearly steering the ship. Sales growth in the region is more than twice the global rate of growth and four times the rate of growth as the next closest region (EAME). Not only that, but North America was also the only region of the world where CAT saw an acceleration in the rate of overall sales. At the other end of the spectrum, sales growth in Asia actually swung to a decline in January, falling 4% y/y. That’s the first negative reading for the Asia region since July 2016. We would also note that coming out of the prior global slowdown in CAT sales, Asia was the first region to climb out of negative territory, so let’s hope it’s not leading the rest of the world this time around.

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