Capex. With the capex spending we've seen, the labor market is bound to recovery briskly, argues Deutsche: -------------------------------
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.
With the capex spending we've seen, the labor market is bound to recovery briskly, argues Deutsche:
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