Moody's Industry sector outlooks regain balance, but recovery remains fragile, uncertain
For the first time since mid-2019, there are more positive than negative outlooks.
NEW YORK (Web Desk) - The distribution of its industry sector outlooks (ISOs) is in a mildly positive posture as 2021 begins, after a record negative tally at the end of June, Moody’s Investors Service says in a new report. At the end of the fourth quarter of 2020, seven industry sectors outlooks were positive and five were negative, while 35 were stable.
Moody’s industry sector outlooks reflect its expectations for fundamental business conditions in a given sector over the next 12 to 18 months.
"For the first time since mid-2019, there are more positive than negative outlooks, with many industry segments showing improvement, and in some cases, nearly close to their pre-pandemic levels," said Moody’s Vice President-Senior Credit Officer Edmond DeForest. "However, even though the ISOs have improved rapidly from the depths of the coronavirus crisis, the positive signal is far from unambiguously bright or a sign of a strong recovery from recession."
Moody’s now forecasts median ISO EBITDA growth for the next 12 months of 6.2%, well above the 3.0%-4.0% range of most medians since the rating agency started tracking them in 2014, DeForest notes in the new report, "Non-Financial Corporations - Global Industry Sector Outlooks: ISO balance is tenuous while uneven economic recovery flashes caution." He cautions, however, that the very high median reflects the impact of the poor 2020 base year, and while the ISOs and EBITDA forecasts are undoubtedly improved, they continue to reflect high uncertainty.
Aided by unprecedented fiscal and monetary policy in the wake of the coronavirus crisis, the rating agency expects global credit conditions to improve overall in 2021. Nonetheless, the initial rapid economic rebound is giving way to a patchier, more tenuous recovery as the pandemic proves hard to contain, with the nascent global economic recovery under threat from still-high COVID-19 cases in the US and Europe, despite vaccine dissemination. As a result, vaccine development and the evolution of the pandemic will remain key factors for economic trends.
