U.S. companies are responding to the lowest unemployment rate in almost 50 years...
NEW YORK - U.S. companies are responding to the lowest unemployment rate in almost 50 years by increasing their focus on automation in order to maintain healthy margins as labor costs tick higher, a Reuters analysis of corporate earnings transcripts shows.
Citigroup Inc, for instance, said that it is expanding its cloud infrastructure to replace routine tasks that used to require human labor. Health insurance company UnitedHealth Group told investors that its automation efforts should save the company over $1 billion next year. And Corona beer brewer Constellation Brands Inc said that its spending on automation should increase the efficiency in which it packs bottles in a variety pack, shaving costs.
Overall, companies have discussed automation on quarterly earnings calls more than 1,110 times since the beginning of the year, a 15% increase from this time last year and nearly double the mentions by this time in October, 2016, according to Refinitiv data. Corporate orders of robotics alone rose 7.2% over the first half of this year compared with 2018, totaling $869 million in spending, according to the Association for Advancing Automation.
Watson said that he is now buying companies that are benefiting from the use of automation because they trade at much more attractive valuations than the companies that provide it, which he is steering clear of. The fastest-growing sectors of automation are in logistics and healthcare, said Jeremie Capron, head of research at ROBO Global, the company behind the $1.2-billion Robo Global Robotics & Automation ETF. The firm’s ETF is up nearly 20% for the year to date, in line with the performance of the benchmark S&P 500 index.
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