Capex.
With the capex spending we've seen, the labor market is bound to recovery briskly, argues Deutsche:
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Capex has shown robust, broad-based gains. Officially
known as equipment and software spending in the GDP
accounts, capex is comprised of four main components:
information processing equipment and software,
industrial equipment, transportation and other, which
includes such items as agricultural, construction and
mining/oilfield machinery. Information processing
equipment and software, which is by far the largest
subcomponent, can be broken down further into
computer and peripheral equipment, software and other.
In the last recession, equipment and software spending
declined a cumulative 20.3% peak to trough. This was
more than twice the 9.8% drop in 2001 to 2003. The
recovery in capital spending has been equally robust,
rising a cumulative 20.4% since its Q1 2009 trough. Still,
it is not until next quarter that equipment and software
spending is expected to enter expansion mode.
Importantly, the recent gains have been across the
board, as all four major components of capital spending
have increased at a double-digit pace year-to-date:
information processing equipment and software
(+11.5%), industrial equipment (+15.9%), transportation
(+98.7%) and other (+22.5%). By itself, the breadth of
improvement in equipment and software spending
speaks to the sustainability and durability of the cycle.
