20140930-NATIXIS-Are_there_threats_to_the_US_industrial_recovery__11页_1mb

Summary of FLASH ECONOMICS ECONOMIC RESEARCH No. 747

Core Content

The document discusses the industrial recovery of the United States in the context of global economic trends, highlighting its distinctive performance compared to the euro zone, Japan, and the United Kingdom. The recovery is attributed to several factors, including low labor costs, strong cost competitiveness, development of energy-related industries, and low energy prices due to the shale gas revolution. It also notes that the relocation of industries from other countries to the US is contributing to this reindustrialization.

However, the document raises concerns about the threats to this recovery, particularly focusing on three main risks that could undermine the US industrial resurgence.

Main Points of US Industrial Recovery

• Industrial production has recovered significantly, surpassing other OECD countries.
• Productive investment is on the rise.
• Export market shares are increasing.
• Industrial employment is gradually improving, especially in sectors such as energy, metals, transport equipment, and plastics and rubber.
• The recovery is concentrated in mid-tech industries like automotive, energy, and chemicals, but does not include the most sophisticated sectors such as IT.

Key Drivers of US Industrial Recovery

1. Low labor costs in the US, especially in the Southern States, compared to Europe.
2. Development of energy-related sectors, including drilling, refining, and chemicals.
3. Low energy prices due to the availability of cheap natural gas and tight oil.

Threats to US Reindustrialisation

1. Loss of Cost Competitiveness

• Wage increases due to full employment may erode the US’s labor cost advantage.
• A steep appreciation of the dollar could also reduce the competitiveness of US exports.
• The dollar’s appreciation is driven by divergent monetary policies and capital flow issues in other regions.

2. Rejection of the US Social Model

• The stagnation of middle-class purchasing power and widening inequalities are linked to the US's cost competitiveness.
• These social issues may challenge the sustainability of the current industrial model.
• The lack of productivity gains is consistent with the low skill level of the US labor force.

3. Loss of Energy-Cost Advantage

• The US energy price advantage could be lost if other countries develop unconventional energy sources, such as shale gas.
• Countries like China, Argentina, the UK, and Germany are exploring or have significant shale gas reserves.
• This could lead to lower global energy prices, undermining the US’s cost competitiveness in energy-intensive industries.

Conclusion

• The US industrial recovery is largely driven by low labor and energy costs.
• It is mid-tech, not high-tech, and does not translate into sophistication or productivity gains.
• The immediate threat to this recovery is the appreciation of the dollar.
• Long-term threats include social model challenges and global energy price changes.
• Short-term risks are tied to the appreciation of the dollar and labor cost increases.

Additional Notes

• The document is confidential and intended only for qualified professionals and investors.
• It does not constitute a financial analysis or personalized investment recommendation.
• The information is based on public data and is not subject to independent verification by Natixis.
• Legal restrictions may apply depending on the jurisdiction of the recipient.