Chart of the week
How investment expenditure will shape up is always a concern during the recovery phase of any recession. An uncertain outlook and overly leveraged balance sheets can deter companies from investing.
Quarterly (1)GDP figures are the main indicator of an economy’s investment expenditure and in the interim, only a few monthly readings can suggest which way investment is heading. Capital goods orders is one of them. These have rebounded sharply in recent months in the major economies reporting these data.
These figures are encouraging and show a degree of momentum. In the US, the regional (2)Fed surveys echo this positive momentum. This good investment performance is a positive indicator of the economy’s ability to bounce back once it emerges from lockdown.
(1)GDP (Gross Domestic Product): Total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period.
(2)Fed: Central bank of the United States.
The opinion expressed above is dated 4th December 2020 and is liable to change.
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