US manufacturing recovery good for transportation sector

The best investment insights come when we can easily combine our proprietary indicators with a broad set of lesser-followed economic data. Macrobond’s Web API series function allows us to easily do this, with the latest example being the growing upside in US manufacturing.

The 7-month high in the S&P Global Manufacturing PMI adds to evidence that a manufacturing upswing in the US is underway. This macro tailwind should benefit transportation equities, which screen favourably on our Tactical Outlook score and Fair Value score.

The latest averages of regional Fed manufacturing surveys show the post-election bump in the sector is gaining momentum. Supplier delivery times have lengthened, indicating stronger demand and tighter capacity.

Meanwhile, current and future new orders have similarly ticked higher.

The macro backdrop also suggests this manufacturing rebound has room to run. For example, the balance of our growth LEIs that are rising – a series we can access and analyze directly via Macrobond’s Web API function - points to more upside in the coming months.

Optimistic capex intentions still point to higher private investment this year. Ultimately, a multi-year pickup in private investment would need follow through on deregulation. But for now, the surveys point to a cyclical uptick.

Treasury Secretary Bessent's latest proposal for a gradual 2.5% universal tariff rollout could provide another tailwind as firms pull forward orders to avoid future tariffs. The transportation sector should benefit and already has a high Tactical Outlook score while trading relatively cheap to our Fair Value estimate.