The US economy may be faltering, but many big names in American manufacturing are going from strength to strength.
In the past week, a succession of industrial companies, including Boeing, Honeywell, Caterpillar and Eaton, reported good third-quarter results and gave upbeat views on their prospects.
Over the next two weeks, others, including Emerson Electric, 3M and Cummins are expected to show similar evidence of robust health.
Yet in recent weeks, concerns over the strength of the recovery have been gathering force. Official data showed US industrial production fell in September, for the first time in more than a year.
The discrepancy raises the question of whether US companies have been able to see sources of strength that macroeconomic data have missed, or have failed to appreciate the slowdown about to hit them.
Honeywell, which makes industrial equipment and aircraft components, predicted on Friday that profits in its operating businesses would rise by 10 per cent or more next year.
However, David Anderson, the chief financial officer, sounded a note of caution. “The markets we are in are generally in pretty good shape. But many of the macroeconomic indicators, particularly outside the industrial economy, are mixed to soft,” he said.
“You have got to say, ‘How long will it continue?’?”
One reason for the disconnect is that markets outside the US are much stronger. The outperformance of the industrial sector this year compared with the broad S&P 500 index has reflected the health of overseas markets rather than that of the US economy.
A common theme in all of last week’s good results was the strength of demand in China, other emerging Asian economies, the Middle East and Latin America.
Most large industrial companies say they want to produce as much as possible in the markets they serve, but exports from the US are also rising, in a move towards the rebalancing of the world economy that is sought by many policymakers.
About 25 per cent of US manufacturing output is exported, and David Huether, chief economist of the National Association of Manufacturers, calculates that the dollar is about 10 per cent undervalued relative to its long-term average, giving US exporters an advantage.
But the strength of exports may not be enough to sustain flagging growth.
Eric Landry, who covers the industrial sector for Morningstar, the investment research company, warned: “Some of the forward-looking indicators can sometimes do better at predicting the outlook for companies than comments made by the companies themselves.”