Between falling sales, plunging profits, and hefty job cuts, it's easy to want to throw in the towel on the stock of mining equipment manufacturer Caterpillar (NYSE:CAT). Shares have fallen 4% this week and are down more than 16% from the highs hit earlier this year. Considering it just announced it was cutting its outlook for the second straight quarter, it's easy to think the only thing Cat is digging is its own grave.

The hardest-hit segment was Caterpillar's resource industries, which is comprised largely of its mining business, and which saw revenues plunge 34%, to $3.6 billion. It was only slightly better in the construction industries, where it experienced a 9% drop in sales. Not only has that been the trend for a while now, but it's an industrywide problem, too, as Joy Global previously recorded a 23% drop in its second-quarter mining equipment business.

Both were hurt by weak demand here at home, but also from China and the rest of Asia, as well. Caterpillar's monthly dealer stats give insight into just how difficult the situation has become.

Where Latin America had been Cat's bright spot, we see that sales there are taking a turn for the worse, and while the Asia/Pacific region had been depressed, it was starting to rebound; only that has turned south, too. Not surprising, really, because China's flash manufacturing PMI index tumbled again in July to hit an 11-month low of 47.7, and its employment index also dropped to 47.3, now the weakest its been since the depths of the global financial crisis in March 2009.

Piling on, mining companies are slashing their capital expenditure budgets. Gold miner Eldorado Gold recently said it was cutting its capex plans by a third, Arch Coal was "diligently" reducing its spending, and BHP Billiton, Rio Tinto , and Vale have jettisoned assets no longer considered core to their operations.

Furthermore, noted short-seller Jim Chanos has become bearish on Cat, saying the spending cuts we're seeing will accelerate. With 70% of Caterpillar's revenues derived from outside the U.S., and almost two-thirds in mining and construction, this could be seen as a very troubling development.

Yet, I still see hope in both the chart and the global economic trends. North America is coming back, even if it's languishing at the moment. Latin America, while flagging, is still positive, and though most of the other regions are still down, they're flattening out, signaling to me that this is more of a bottom than a new leg lower.

Iron prices are on the rise, nearing a three-month high, and copper -- though down 11% so far this year -- hit a five-week high on the strength of European manufacturing. If the continent is firming up as North America regains its footing, we have the makings of enough of a recovery to compensate for China's stall.

Caterpillar's stock dropped sharply after its earnings report, putting it on par where it was a year ago. While the monetary policies of central bankers has played a large role in propping up the world's economies, much of the world is in a better position today than last year, and the gloomy outlook for Cat could just be the time when it emerges from the fog. 

Fool contributor Rich Duprey has no position in any stocks mentioned. The Motley Fool owns shares of Companhia Vale Ads. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.