Our outlook for industrials stocks

Slowing global industrial activity presents compelling long-term investment opportunities among a handful of companies.

Adam Fleck, CFA 4 July, 2013 | 4:44AM
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Macro industrial indicators turned downward in the second quarter, as purchasing managers' surveys across the U.S., China, and Europe all posted metrics below the key growth level of 50.
U.S. industrial production grew at a slightly higher year-over-year rate in May versus April, but output remained slow compared with recent quarters.
Gains in housing and automotive continue to lead the sector, and while non-residential construction is taking a pause, we expect further gains as the year progresses.

The second quarter brought renewed concerns about the global industrial economy. Purchasing managers' indexes fell or remained below the growth demarcation of 50 in key geographies such as the United States, China and Europe, while other indicators such as China's electricity consumption showed signs of slowing. Moreover, U.S. industrial production in May was relatively flat sequentially and grew at the slowest year-over-year rate (1.6%) since February 2010.

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About Author

Adam Fleck, CFA

Adam Fleck, CFA  Adam Fleck is the regional director of equity research for Australia and New Zealand at Morningstar.

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