Economy Starting to Hum Again
Morningstar's Bob Johnson on positive news in tech and transportation, strong signals in production data, housing's room to run, and the inflation picture.
While this week's economic indicators were positive, I was most impressed with corporate reports in two sectors: technology and transportation. On technology side, software giant Oracle (ORCL) reported new-license growth after four consecutive quarters of decline. Though Oracle has been a little late to the improvement party, an uptick in this key sector is an important indicator of corporate confidence.
Transportation maven FedEx (FDX) reported much better than expected volumes during its busiest day of the year. The transportation sector has been a bit of a laggard this year, and I was very glad to see volume gain some headway. If we aren't shipping things, then we aren't building things, either.
Speaking of production, the best economic data this week was a strong industrial production number, which is now up for the fifth consecutive month. Headline inflation numbers, especially on the producer side, looked a little scary. However, further investigation shows that a short-term spike in energy prices was the main culprit.
Robert Johnson, CFA does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.