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What Investors Want To Know: Diversified Manufacturing, Capital Goods And Aerospace & Defense 2023 Expectations (Sector-Specific Momentum Mitigates Economic Risks)

What Investors Want to Know: Diversified Manufacturing, Capital Goods and Aerospace & Defense 2023 Expectations (Sector-Specific Momentum Mitigates Economic Risks)

What Investors Want to Know: Diversified Manufacturing, Capital Goods and Aerospace & Defense 2023 Expectations (Sector-Specific Momentum Mitigates Economic Risks)

Special Report Fitch Rating’s economic forecast for 2023 includes a mild recession, but analysts within our Diversified Manufacturing, Capital Goods, and Aerospace & Defense sectors maintain neutral outlooks. Fitch Ratings expects a mild slowdown in underlying demand for manufacturing and capital goods in 2023, driven by a weaker global economic outlook. However, this is mitigated by high order backlogs, strong pricing power, and better preparedness compared with previous downturns. Beyond the cyclical concerns, these sectors are also supported by several secular growth drivers, such as electrification, digitization and reshoring of manufacturing activities. The fundamental demand drivers for aerospace & defense (A&D) are improving and are expected to provide a solid foundation for growth in 2023. Aerospace continues to recover from one of the worst downturns in history and rising geopolitical tensions are driving global defense spending. Against this strong demand backdrop, issuers manage through labor shortages that contribute to supply chain disruptions and inflationary pressure. Meeting demand pressures in 2023 will test issuers’ capability to develop and retain a less-tenured workforce over the coming months.

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Daisie Hobson

Daisie Hobson is a Director at the Reshoring Institute and an engineer with many years of experience in manufacturing and project management.

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