Industrial production remained unchanged last month after a forgettable January but reflected growth on a year-over-year basis. Strong gains in manufacturing and mining output managed to offset declines in utilities production, which in turn helped the broader industrial sector overcome January’s declines.
Given these positive trends, mutual funds that have significant exposure to industrials could be suitable investment options. Before short-listing these funds, let’s take a look at the encouraging data that have raised hopes for the industrials sector for the coming months.
Manufacturing, Mining Boost Output
The Board of Governors of the Federal Reserve System reported that industrial production was unchanged sequentially, in contrast to a decrease of 0.1% in January. Also, industrial output grew 0.3% year over year.
Manufacturing output increased 0.5% for the second consecutive month in February and registered the sixth straight month of gains. It also rose 1.2% over the last one year. Gains in production of machinery, fabricated metal products and non-metallic mineral products led the rally in manufacturing output. Additionally, mining production grew 2.7% last month and was also up 1.8% on a yearly basis.
Also, among the market groups, consumer non-energy durables increased 0.3%. Further, the output of business equipment and construction supplies climbed 0.7% and 1.3%, respectively. Indexes for both non-energy materials business supplies advanced over 0.5%. Further, both durable and nondurable materials registered growth. Although, capacity utilization dipped 0.1% last month, it recorded a 0.6% year-over-year increase.
Manufacturing Index, Factory Orders Rally
The ISM Manufacturing Index climbed 3% from January to 57.7 in Feb 2017. Notably, the February value of the manufacturing index was the highest since Aug 2014, when it was 57.9. Strong gains in new orders pushed up manufacturing activity last month. Previously, factory orders rose 1.2% in January after advancing 1.3% in December.
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