Global construction machinery demand, tracked through China and Japan excavator exports Report Interpretation

Overview

Goldman Sachs’ July 2026 China and Japan Machinery Export Tracker uses excavator export volumes and values as a high-frequency indicator of global construction-machinery demand. The update finds a broad loss of momentum: developed markets weakened, most emerging-market regions moderated, and only the Middle East and Oceania showed relative resilience.

Core views

The July data point to a sharp deceleration in the global construction-machinery demand signal derived from China and Japan excavator exports. China’s export value growth slowed to +7% year on year from +34% in June, Japan’s exports shifted to a -3% decline from +7%, and combined export value turned negative at -1% after +17% in June. Combined export volume also moderated to +8% from +20%, with China slowing to +10% from +23% and Japan to +3% from +13%. Developed-market readings weakened materially. In North America, combined export volume decline narrowed to -2% from -14%, helped by China’s less severe volume decline of -3% versus -34%; however, combined export value swung to -17% from +15%. Japan’s North American export value turned to -11% from +23%, while China’s value growth slowed to +13% from +46%. Europe’s volume growth slowed to +13% from +42%, and its export-value decline widened to -13% from -3%. China’s Europe export value turned to -9% from +16%, while Japan’s remained weak at -9% after -11% in June. Emerging-market momentum also moderated broadly, mainly as China export growth slowed. South America’s volume and value growth eased to +16% and +30%, respectively, from more than 50% growth in June on the volume/value comparison cited in the update; China’s value growth slowed to +28% from +49%, while Japan’s value growth remained strong at +54% despite a 27% volume decline. Southeast Asia softened to flat volume and value growth from +21% and +15%, reflecting China’s slowdown to +1% volume and +9% value growth from +23% and +35%; Japan continued to post a double-digit decline. Middle East and Africa volume/value growth slowed to +22%/+6% from +49%/+32%, led by Africa’s moderation to +28%/+4% from +66%/+43%, but the Middle East stayed solid at roughly 10% year-on-year growth, including +11% export-value growth. Other Asia volume turned to -4% from +16%, and value growth slowed to +7% from +22%. In contrast, Oceania accelerated, with volume/value rising +57%/+67% after +46%/+24% in June. The tracker’s construction rests on the importance and tradeability of excavators: they account for roughly 50% of global construction-machinery demand and are the most actively traded construction-equipment type across regions. China and Japan were estimated to represent about 70% of the global excavator market outside their domestic markets as of 2022, while customs data suggest their exports represent more than 80% of demand outside the two countries. Goldman Sachs therefore treats the combined series as a way to reduce noise caused by supply shifting between China and Japan. The report maps the appropriate export signal to regional demand and company exposure. Japan exports are more representative of North American and Western European demand because Japan has historically served as a key machinery export hub to those regions. China exports are more useful proxies in Southeast Asia, the Middle East, Africa and South America, where Chinese producers have greater presence and multinationals often use China factories for emerging-market exports. Japan exports are more weighted to developed markets, whereas China exports are weighted toward emerging markets, although China’s developed-market contribution has risen. Back-testing supports the tracker’s intended use as a leading activity indicator rather than a standalone forecast. Across Goldman Sachs’ global machinery coverage, quarterly sales revenue has shown high correlation with the export series, with Caterpillar recording the highest 0.86-0.91 correlation range. The data also show 0.64-0.79 correlation with historical regional market-demand trends tracked by Komatsu, whose data are released with a three-month lag. Company-level tests indicate that most major players correlate more strongly with Japan export volume/value than with China data; Caterpillar and Volvo’s global ex-Asia sales are exceptions with meaningfully high correlation to China export data. Examples include Caterpillar ex-Asia Construction Industries revenue correlations of 0.87 with combined exports and 0.89 with Japan exports, Volvo ex-Asia construction-equipment volume correlations of 0.71 and 0.67, and CNH construction-equipment revenue correlations of 0.84 and 0.83, respectively. Regional company correlations reinforce the geographic interpretation. Caterpillar, Volvo, CNH, Komatsu and Takeuchi North American revenues show significant correlation with Japan excavator export value; Komatsu’s North American and European correlations with Japan export value are 0.77 and 0.67. Kubota’s Europe construction-equipment revenue has a 0.81 correlation with Japan export value, compared with 0.57 in North America. The report also finds combined exports correlate well with retail demand in North America, Europe and Oceania and wholesale demand in South America; China exports alone correlate fairly well with wholesale demand in the Middle East and Africa and retail demand in Southeast Asia.

Analysis framework

Goldman Sachs compares monthly China and Japan excavator export volume and value growth by destination, then combines the two sources to limit country-level supply-shift noise. It maps each exporter’s regional relevance to machinery-company sales footprints and back-tests the series against quarterly company sales and Komatsu market-demand data.

Methodology notes

• Other

  High-frequency excavator export tracker and correlation back-testing

  The report uses monthly customs export volumes and values from China and Japan as timely proxies for regional construction-machinery demand, then tests how closely those series have moved with company sales and historical market-demand data.

• Industry AnalysisUpstream-Midstream-Downstream Transmission

  Regional export flows as a demand transmission indicator

  The analysis links excavator exports from production hubs to destination-market construction-equipment demand, accounting for China’s greater emerging-market relevance and Japan’s stronger developed-market export role.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Caterpillar

  Its Construction Industries sales have high correlations with combined China/Japan and Japan-only excavator export data, including in North America and EMEA.

  Strengths

  The report cites the highest export-data correlation range among covered machinery companies, at 0.86-0.91.

  Comparison

  Ex-Asia Construction Industries revenue correlations were 0.87 with combined exports and 0.89 with Japan exports.

  Risks

  Weak July export-value readings in North America and Europe may indicate softer regional demand conditions.

• Volvo

  Its ex-Asia construction-equipment volume and North America/Europe revenue show meaningful correlation with excavator exports.

  Strengths

  Ex-Asia sales-volume correlation was 0.71 with combined China/Japan exports.

  Comparison

  North American revenue correlated 0.79 with Japan export value; European revenue correlated 0.65.

  Risks

  Developed-market export weakness is relevant given the report’s regional correlations.

• CNH

  Construction-equipment revenue tracks combined China/Japan and Japan >6t excavator export value.

  Strengths

  The report cites 0.84 correlation with combined exports and 0.83 with Japan >6t export value.

  Weaknesses

  European revenue correlation was more modest at 0.61 with combined exports and 0.56 with Japan >6t exports.

  Comparison

  North American revenue correlation was 0.70 with combined exports and 0.64 with Japan >6t exports.

  Risks

  North American export-value growth turned negative in July.

• Komatsu

  Its regional sales and separately reported market-demand data are used to validate the tracker.

  Strengths

  North American and European construction-equipment sales correlations with Japan export value were 0.77 and 0.67.

  Comparison

  The report finds export data correlate 0.64-0.79 with Komatsu historical regional demand trends.

  Risks

  Its demand data are released with a three-month lag.

• Kubota

  Construction-equipment sales correlate with Japan excavator export value, particularly in Europe.

  Strengths

  Total construction-equipment sales correlation was 0.75; Europe correlation was 0.81.

  Weaknesses

  North American correlation was lower at 0.57.

  Comparison

  Europe appears more closely linked to Japan export value than North America.

  Risks

  Europe export-value growth declined 13% year on year in July.

• Takeuchi

  Construction-equipment sales, especially in North America, correlate with Japan excavator export value.

  Strengths

  Total and North American correlations were 0.69 and 0.70.

  Weaknesses

  Europe correlation was low at 0.44.

  Comparison

  North America is more closely associated with the Japan export signal than Europe.

  Risks

  North American export value fell 17% year on year in July.

Key data

• Combined China and Japan excavator export value growth-1% yoy in JulyTurned negative from +17% yoy in June.
• China excavator export value growth+7% yoy in JulyModerated from +34% yoy in June.
• Japan excavator export value growth-3% yoy in JulyTurned from +7% yoy in June.
• North America combined export value growth-17% yoy in JulyTurned from +15% yoy in June.
• Europe combined export value growth-13% yoy in JulyDecline widened from -3% yoy in June.
• Oceania export volume/value growth+57%/+67% yoy in JulyAccelerated from +46%/+24% yoy in June.
• Caterpillar sales/export correlation0.86-0.91Highest correlation range among covered machinery companies cited by the report.
• Export series correlation with Komatsu historical demand data0.64-0.79Compared with regional demand data released with a three-month lag.

Impact & implications

The report interprets July export data as evidence that global construction-machinery momentum weakened, particularly in North America and Europe, while emerging-market demand signals became less broad-based. Its regional mapping suggests Japan export data are especially informative for developed-market-exposed machinery sales, whereas China export data are more informative for several emerging-market regions.

What to watch

• Monthly China and Japan excavator export volume and value growth, particularly whether combined export value remains negative.
• North America and Europe export-value trends, where July data weakened sharply.
• Whether Middle East demand remains solid after the June inflection and whether Oceania’s acceleration persists.
• The relative contribution of China versus Japan exports, which can affect interpretation of regional demand signals.