The beginning of Q3 showed an improving trend in manufacturing activity in the United States. After clocking the highest reading since March 2019 in July, U.S. manufacturing activity accelerated to a nearly two-year high in August due to solid new orders (read: Global Manufacturing Rebounding: ETFs in Focus).
The Institute for Supply Management (ISM) said on Sep 1 that its index of national factory activity rose to a reading of 56.0 last month from 54.2 in July. That marked the highest level since November 2018 and three successive months of growth. Economists polled by Reuters had forecast that the index would rise to 54.5 in August.
Of the 18 manufacturing industries, 15 reported growth in August. The winning industries are Wood Products; Plastics & Rubber Products; Food, Beverage & Tobacco Products; Textile Mills; Chemical Products; Computer & Electronic Products; Primary Metals; Fabricated Metal Products; and Machinery among others.
Against this backdrop, below we highlight a few ETF areas that emerged winners in the month of August.
Wood Products – iShares Global Timber & Forestry ETF WOOD
Timber-related exchange traded funds have been on solid momentum as lumber prices are rising. A solid housing market is acting as a huge source of demand for lumber. Solid demand for home-furnishing goods will also make the wood products market red hot. The fund WOOD added 11.9% past month.
Food & Beverage – Invesco Dynamic Food & Beverage ETF PBJ
Demand for food and beverage should remain in the sweet spot in the coming days as these are necessary items and less ruffled by economic weakness. The fund PBJ thus added a decent 3.8% past month.
Chemicals – iShares U.S. Basic Materials ETF IYM
The survey on the chemical products industry revealed thatbusiness is in solid state with production failing to meet demand. “Some upstream supply chains are starting to have issues with raw material and/or transportation availability," indicated the survey. Overall, high demand ensures the rally in materials stocks. The fund IYM has jumped 7.1% past month.
Computer & Electronic Products – VanEck Vectors Semiconductor ETF SMH
The computer and peripherals space has been a COVID-19 winner due to the prevailing work-and-learn-from-home culture. A Computer & Electronic Products industry survey showed that despite the COVID-19 issues globally, lines of supply have not been disturbed. This clearly points to an upbeat outlook. The fund has increased 7.6% past month.
Apparel – SPDR S&P Retail (NYSE:XRT) ETF XRT
The U.S. apparel sales continued to recover from the pandemic-induced lockdown. In July, sales at clothing stores rose by 5.7% sequentially. This was on and above an 8.4% sequential increase in sales in June. The XRT fund puts about 17.18% weight in the apparel segment. XRT has gained 11.9% past month.
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SPDR SP Retail ETF (XRT): ETF Research Reports
VanEck Vectors Semiconductor ETF (SMH): ETF Research Reports
iShares Global Timber Forestry ETF (WOOD): ETF Research Reports
Invesco Dynamic Food Beverage ETF (PBJ): ETF Research Reports
iShares U.S. Basic Materials ETF (IYM): ETF Research Reports
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