(Bloomberg)FedEx Corp. and United Parcel Service Inc., two bellwethers of the U.S. economy, are signaling durability of a global recovery powered by growth overseas rather than demand at home.
Both freight companies raised profit forecasts in recent days on the strength of cross-border shipments, especially from Asia, reflecting confidence in trade flows even as the European debt crisis threatens to weaken global demand.
While rising international deliveries suggest that a “double-dip” recession is unlikely for the global economy, they reinforce forecasts for export-driven growth amid a lengthy period of unemployment around 9 percent in the U.S. The reliance on foreign demand bolsters a theory espoused by Pacific Investment Management Co. that the world’s largest economy is in a “new normal” phase of slow growth.
“The international marketplace is what’s driving growth at FedEx and UPS and any other big company that has international exposure right now,” said David Campbell, an analyst at Thompson Davis & Co. in Richmond, Virginia. He recommends buying shares of both FedEx and UPS.