You say what? Not in our country… it has all moved overseas, right? Well, we have opined on this subject several times that cheap energy and the advancements in technologies (Robotics… The Next Big Thing) would cause a swell in companies to return to our country.
Here are some thoughts from Ed Yardeni today that echoes our thoughts and points to this secular change:
Labor is still cheaper overseas, but it isn’t as expensive as it once was in the US. Besides, the IT revolution has increased factory productivity with more automation, including robots and the “Internet of Things.” For now, the evidence is finally mounting that the highly anticipated new age in US manufacturing may be happening, though the jury is out on how long it will last.
(1) Capital spending. One of the strongest components of real GDP in recent quarters has been real capital spending on industrial equipment. It is up 14.7% y/y through Q2, the fastest such pace since Q4-2011.
(2) Factory orders. Industrial machinery orders soared to a record high during July. They are up 37.3% y/y. Nondefense capital goods orders excluding aircraft rose to a record high during August.
We welcome back the Manufacturing industry with open arms!
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