Thursday, July 25, 2013

“Second Recovery” Unfolding in US (excerpt)

Markit’s flash M-PMI for the US rose from 51.9 in June to 53.2 in July, the highest in four months. There were gains in the following components: output (from 53.5 to 54.0), new orders (53.4 to 55.1), and employment (49.9 to 52.6). There was an especially big jump in new export orders (46.3 to 52.3), which is impressive given the strength of the dollar and the slower pace of global economic growth.

My “Second Recovery” scenario is playing out nicely this year as rising auto and new home sales boost manufacturing and the overall economy. Railcar loadings of motor vehicles rose to another cyclical high in mid-July. This series is highly correlated with auto sales. The same goes for railcar loadings of lumber and wood products, which is highly correlated with housing starts.

Today's Morning Briefing: Brave New World Update. (1) From the High Tech Revolution to the New Industrial Revolution. (2) Santa Claus coming to Santa Clara. (3) Meet Baxter, the hard-working robot. (4) Income inequality could worsen unless everyone MOOCs. (5) High-priced higher education is about to deflate. (6) Compute this: A master’s degree for $6,600. (7) Everything can be done in 3-D. (8) Trucks without drivers. (9) China is getting weaker. (10) Europe is getting stronger. (11) The US is chugging along as railcars haul more autos and lumber. (12) Focus on overweight-rated housing-related industries. (More for subscribers.)

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