USLB - More Positive News

Summary

• There has been heavy demand for transportation infrastructure during COVID which has held up post-COVID.
• Equipment needs replacing and upgrading with the lull in production during COVID.
• Industries have capacity limitations likely to stretch delivery for several years holding demand higher for longer than in prior periods.

Durable Goods Orders released today are already on an uptrend and have spiked higher. It is well known and the media has frequently headlined that vehicles and aircraft have significantly greater demand than manufacturing has been able to supply due to supply chain issues related to COVID. Today's report underscores that perception.

Transportation as a percentage of GDP at 8.4% in 2021, was below the historical 10% level-see chart. There has been heavy demand for transportation infrastructure during COVID which has held up post-COVID. Equipment needs replacing and upgrading with the lull in production during COVID. Orders for aircraft announced last year are now showing up in the data and recently there has been a surge in Class 8 truck orders. Both industries have capacity limitations likely to stretch delivery for several years holding demand higher for longer than in prior periods.

There are no recession signals in this data. Selected manufacturing/service companies are favored over the next 3yrs-5yrs.

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Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

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