Growth on the Way?
Business conditions in early March remained strong according to the Morgan Stanley Business Conditions Index (MSBCI). The expansion is becoming increasingly durable and self-sustaining. What's more, business conditions are accelerating.
Pricing firmed noticeably and financial conditions remained strong. Advance bookings increased to the highest level in eight months, and plans to increase capex also rose to a record level.
Survey results suggest that Corporate America continues to pace this new dynamic, but consumers are also playing a vital role. Businesses stepped up spending on services. And so far, despite rebounding gasoline prices, the supposedly overextended consumer continues to spend.
Capital spending has been a major source of the recent upside growth surprise. A whopping 57% of respondents said that companies under their coverage plan to increase capex over the next three months, the highest level in the history of the question. Of these, 46% plan to increase outlays by 6% or more.
Capex spending would be nice, and so would some more jobs. Let's keep our fingers crossed that the MS boys are correct. Does this mean higher interest rates? Potentially, yes. Lets get this party started and if we have to shake out a few weak hands in the process, so be it. A few disgruntled bond and real estate speculators doesn't bother me a bit.
Morgan Stanley: Business Conditions Ramping Up
Pricing firmed noticeably and financial conditions remained strong. Advance bookings increased to the highest level in eight months, and plans to increase capex also rose to a record level.
Survey results suggest that Corporate America continues to pace this new dynamic, but consumers are also playing a vital role. Businesses stepped up spending on services. And so far, despite rebounding gasoline prices, the supposedly overextended consumer continues to spend.
Capital spending has been a major source of the recent upside growth surprise. A whopping 57% of respondents said that companies under their coverage plan to increase capex over the next three months, the highest level in the history of the question. Of these, 46% plan to increase outlays by 6% or more.
Capex spending would be nice, and so would some more jobs. Let's keep our fingers crossed that the MS boys are correct. Does this mean higher interest rates? Potentially, yes. Lets get this party started and if we have to shake out a few weak hands in the process, so be it. A few disgruntled bond and real estate speculators doesn't bother me a bit.
Morgan Stanley: Business Conditions Ramping Up
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