经济周刊产业轮换

William Blair After effectively three years of recession for the manufac-turing and industrial sector of the economy, last week’ssharp rebound in the ISM index to 52.6 (the highest since Last week, the ISM manufacturing index jumped to itshighest level since 2022 (which was in the midst of thepandemic surge in the demand for goods, exhibit 1), August 2022, in the midst of the COVID boom) looks to bea definitive sign that things have changed.In thisEconom-ics Weekly,we look at what the financial market and real economic data are telling us about the durability In ourEconomics Weeklyfrom two weeks ago, we onceagain presented the case for a continued capex boom.Over the last several years, we have argued that this 1.An emerging shortage of labor, due to demographics,deglobalization, and immigration controls, and result- 2.An aging capital stock that needs renewing (in partic-ular the energy grid), which is one of the main drivers New Orders Rising to Replenish Depleted InventoriesWhile it is true that the comments section of the ISMreport was not consistent with this increase, the sub-components—all except the employment index—were 3.An innovation boom, resulting from the R&D surgeover the last few years, which is forcing companies 4.Government incentives, including the Biden admin-istration’s series of policies to encourage reindustri-alization—such as the CHIPS Act, the InfrastructureInvestment and Jobs Act, and the Inflation Reduction In addition, tariffs and the Trump administration’s seem-ingly single-minded goal of increasing national defenseand security are forcing many companies to double up ontheir supply chains and hold more inventory, given that ISM respondents have also stated that their customers’inventories are far too low and need replenishing, which William Blair Financial Conditions Are Highly AccommodativeFinancing is also extremely important in the decision- making process for large capital goods orders. To thateffect, gauges of aggregate financial conditions are tightlycorrelated with manufacturing activity. This is depicted in Other leading indicators of the ISM index are also point- The reality is that the ISM is a measure of activity report-ed by purchasing managers on the shop floor, where thedata likely filtered down after decisions on large capitalgoods orders were made at the board level. These deci-sions are based on economic expectations, the cost ofcapital, necessity, and combined new and replacement de- Upstream Manufacturing Surveys Point to ContinuedStrength Lastly, it is worth looking at surveys of manufacturersfurther upstream in the production process, such as thoseof electric and electro-industrial manufacturers. The lessfollowed NEMA (National Electrical Manufacturing Asso- Hence, exhibit 4 shows that total factory goods ordershave been steadily rising for most of the last year, despitecontinued weakness among the responses from purchas- Importantly, the electro-industrial manufacturers providemuch of the core equipment that needs to be ordered firstin the manufacturing process, before more downstreamequipment and materials are ordered. This survey should As exhibit 6 shows, the NEMA index has had a strong cor-relation with the ISM new orders index, which histori-cally lags by 3 months. As also shown, the recovery up tonow has been more narrowly concentrated among theelectro-industrial manufacturers and not broad enoughto tangibly impact the ISM. Yet, given the continued William Blair began in 1958 after his return from the war as a bombar-dier), in search of what insights we might glean on the The Dow theory today can act as a useful confirmationgauge from the stock market about how the economyis performing and whether the equity market is still ina bull or bear scenario. Based on this theory, a strongequity market should be a reflection of a strong economy. In addition, the economy’s performance can be gauged bythe relationship between the industrial stocks (the com-panies thatproducestuff) and the transportation compa- The theory also indicates that a bull market will be con-firmed when both the industrials and the transports are What we are seeing playing out in the stock market at themoment is a pure rotation. Investors are not moving outof the market as a whole; rather, they are attempting to If, however, industrial stocks are rising but the transpor-tation stocks are falling, this is likely to signal weakeningdemand in the end-markets. This also indicates cautionamong investors about the strength of the recovery, given The rotation is not signaling that investors question theAI future, but rather that investors are waking up to thefact that for that future to continue as envisioned, massiveinfrastructure investment needs to be undertaken to facil-itate it. Today’s aging electricity grids are already strug-gling to supply the necessary energy for current demand, As shown in exhibit 7, both industrials and transportsare making higher hig