Sep-26: Indicator moderates slightly to 1.06x from 1.07x; continuing to point to 4% growth

UBS Short Cycle Indicator fell slightly MoM to 1.06x in September from 1.07x in August. The indicator is a 6-month lead indicator for short-cycle organic revenue growth, and the current reading points to +4% organic growth in six months' time. By region, Europe declined to 1.06x from 1.08x and Asia ex-China fell to 1.09x from 1.11x, while the US was flat at 1.06x and China improved to 1.05x after two months of declines. US new orders rose to 56.1 and finished goods inventories to 53.0; Europe new orders rose to 52.5; China new orders rose to 53.4. While higher energy prices pose input cost inflation risk, covered companies have been raising list prices to protect margins. UBS continues to favour value and self-help angles within cyclicals, preferring Industrial Automation over generic General Industrial, with top ideas Renishaw, Volvo, Andritz and Siemens; secular growth at reasonable price ideas Schneider, Prysmian, Siemens Energy and Metso;