Reshoring in the U.S.

Reshoring is a relatively new concept where jobs that were outsourced overseas in the past are now being brought back home.

We have begun to see this occur in the U.S, and it has been driven by various factors. Firstly labour costs in Emerging Markets such as China have risen over time diminishing some of the benefits of locating there. Secondly the invention of fracking has led to cheaper energy in the U.S. which has helped decrease production costs and so made it more competitive to develop at home. In general the U.S. labour market is highly skilled, and with unemployment still at 7.8% there is available supply currently.

So what are the implications of this reshoring trend we may be beginning to witness? Well firstly it is good news for the U.S. in terms of job creation, this should lead to the whole economy benefitting. The government should also benefit from increased income taxes and potential corporation taxes. Manufacturing stocks could see upside potential, as could stocks linked to consumer spending.

It's still very early days but this reshoring trend is another positive supporting the U.S recovery. Of course there could be some countries that suffer as jobs flow out of certain countries. The Emerging Markets revolution may now have some competition!