While the outlook for various parts of the energy industry have been slashed amid the plunge in oil prices, the prospects for most other industries are stable to positive, says Moody’s Investors Service in a new report.
The rating agency notes that while it lowered its outlooks for three segments of the energy business in the fourth quarter, the overwhelming trend among corporate industries is for outlooks to remain stable, despite the turmoil in oil markets.
“In the fourth quarter of 2014, we lowered our outlooks for three oil and gas-related subsectors,” says Mark Gray, managing director of global corporate finance at Moody’s. “But two thirds of our 54 sector outlooks are stable, reflecting our expectations of modest positive growth for corporate industries worldwide.”
Moody’s reports that positive industry outlooks still outnumber the negative ones by two to one, and 10 of the 12 positive sector outlooks are in North America, with eight of those in consumer-focused industries that have benefited from aggressive monetary policy actions by the U.S. Federal Reserve Board; and that will also benefit from the shift in consumer spending from gasoline and heating oil to more discretionary items.
“Falling oil prices have already started to benefit non-energy sectors that depend on consumer spending and confidence, cutting fuel costs for heavy industry and leaving more money in consumers’ pockets,” it says, noting that the drop in oil prices has led to lower costs for the global airlines and for shipping and chemical companies.
“In addition, consumers’ savings on fuel costs are giving cruise operators, homebuilders and consumer durables producers grounds for optimism this year,” it says.
Moody’s has already upgraded its outlooks for the global airlines and for the North American solid waste industry, it notes. At the same time, it has also lowered its outlook for the global base metals industry to negative from stable amid weak commodity prices and soft demand.
“The small roster of six negative sector outlooks reflects industry-specific factors, which we consider a positive signal, because there is no wider malaise connecting them,” notes Gray.