“Super bullish,” Goldman Sachs analyst Joe Ritchie told Yahoo Finance when asked to sum up the vibe at the two-day event in New York City. “We are at the start of a very significant infrastructure build in the U.S. Some might call it a U.S. manufacturing renaissance.”
Several big catalysts are on the horizon for the industrials patch, people at the event told Yahoo! Finance.
The first is unprecedented investment by the government in the form of the new Inflation Reduction Act (IRA). And the other are re-shoring initiatives — notably the Chips and Science Act — that are targeted to boost domestic output by strengthening the labor market.
These factors appear to already be driving a rebound in the fortunes of industrials in the second quarter.
“Demand from our larger customers is picking up,” Clean Harbors (CLH) co-CEO Michael Battles told us. Clean Harbors is a waste management firm that services the majority of the Fortune 500.
Added Battles: “They’re doing more production in North America… and we’re seeing that volume come into our network.”
The CEO of truck broker RXO (RXO) Drew Wilkerson sees a similar type of demand bounce unfolding.
“It’s a tough macroeconomic environment right now. … But there are reasons for optimism in the back half of the year,” Wilkerson said.
Trucks hauling shipping containers drive in Boston, Friday, March 17, 2023. (AP Photo/Michael Dwyer)
Wilkerson added: “Retail and e-commerce customers are talking about how their inventory is restocked and we have to get orders out to the end consumers.”
These green shoots come as the U.S. economy is fresh off meager 1.1% annualized Gross Domestic Product (GDP) growth in the first quarter. In 2022, GDP expanded 2.1%.
If you take a look at the price action in the industrial complex, some investors have begun to position for the no-recession scenario. The emphasis being on some investors.
Year to date, Clean Harbors stock has soared 22% on the back of a string of solid quarterly results, while RXO is up a not-too-shabby 11%.
And after four consecutive weeks of outflows, the industrial sector recorded its first inflows in more than a month according to new data out of Bank of America.
The closely watched Dow Transportation Average (^DJT) tells a little different story, however.
The transportation gauge — which is viewed by many as a leading indicator for the state of the U.S. economy given the 20-stock index is comprised of airline, trucking, railroad and delivery stocks — has underperformed the broader market over the past six months amid slowing economic growth and recession fears. It has tanked more than 5% compared to the Dow Jones Industrial Average’s drop of nearly 2%.
Big-name industrials such as Caterpillar (CAT) and John Deere (DE) are each down by more than 10% in the past six months.
But if you’re willing to brush those warning signs aside and bet on an under-the-radar industrial renaissance, there are opportunities.
Go with industrial powerhouses that play in smart infrastructure such as Johnson Controls (JCI), Goldman’s Ritchie says.
He makes the case that supply chain pressures are easing, and it’s having a “really powerful impact on growth.”
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.
The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.
The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.
Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.
Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.
Overall manufacturing sales in constant dollars fell 0.8 per cent in August.
This report by The Canadian Press was first published Oct. 16, 2024.
