Morgan Stanley Highlights US Industrial Gains as Reshoring Drives Capital Goods Boom

Morgan Stanley is forecasting a sharp divide in the US economy in 2026, with companies linked to fixed-asset investment surging while those tied to production and consumer demand lag. The firm points to rising energy prices and tighter monetary policy as headwinds dampening consumer spending, intensifying this split.

Supply chain challenges and the growing cost gap between US and global gas prices are accelerating a shift of production back to the US. Capital goods imports into the US have maintained a robust 30% year-over-year increase early this year, reflecting a push toward domestic industrial investment.

In stark contrast, US imports of consumer goods have dropped about 30% compared to last year, a sign that demand for finished goods remains soft even as manufacturers ramp up. Morgan Stanley interprets this as a clear signal that reshoring favors the industrial sector's infrastructure builders more than direct consumer product sellers.

The investment bank draws attention to a roughly 35% rise in capital goods imports versus 2022-24 averages, underscoring what it calls a "re-industrialization" underway within the US. This trend fits with Morgan Stanley's broader $10 trillion reshoring thesis, betting heavily on production moving stateside.

However, Morgan Stanley highlights that total goods consumption might not rise alongside reshoring and could even fall amid cost pressures, leaving the gains to businesses involved in building and servicing the reshored operations like equipment suppliers and industrial distributors.

The data also suggest inventory levels in the US have largely stabilized following a massive buildup and subsequent drawdown through 2025. Import volumes now resemble pre-election levels, signaling a normalization phase after recent volatility.

Meanwhile, export activity out of China is under pressure early this year, running about 2% below last year's post-Lunar New Year levels, despite increased US import activity. This points to shifting dynamics in global trade flows.

Morgan Stanley's watchlist of companies positioned to capitalize on this trend includes Rockwell Automation (NYSE:ROK), Parker-Hannifin (NYSE:PH), W.W. Grainger (NYSE:GWW), Johnson Controls (NYSE:JCI), Hubbell (NYSE:HUBB), Vertiv (NYSE:VRT), AMETEK (NYSE:AME), Trane Technologies (NYSE:TT), Eaton (NYSE:ETN), Regal Rexnord (NYSE:RRX), and Gates Industrial (NYSE:GTES). They express less optimism about firms such as Carrier Global (NYSE:CARR), Lennox International (NYSE:LII), Emerson Electric (NYSE:EMR), Ingersoll Rand (NYSE:IR), Allegion (NYSE:ALLE), Otis Worldwide (NYSE:OTIS), Stanley Black & Decker (NYSE:SWK), and 3M (NYSE:MMM).

The industrial sector's story this year is less about direct consumer spending and more about the infrastructure and equipment necessary to bring manufacturing home. This split in momentum between capital goods and consumer goods is shaping a complex picture for US industry as it braces for reshoring's ripple effects.

One of the bigger questions left hanging: will these reshoring investments translate into sustained production growth or merely serve as a buffer against global supply chain disruptions?