By Nitish Marwah, Zacks.com
April 4, 2019 - The Institute for Supply Management (ISM) stated that its manufacturing index increased for the 119th consecutive month in March.
Such an increase was achieved on the back of robust demand and tight labor market conditions. Improving situations on the trade war front also added to the overall optimism. Under such circumstances, betting on mutual funds with significant exposure to the manufacturing sector would fetch alluring returns.
Manufacturing Activity Increases for 119th Month
The ISM Manufacturing Index increased to 55.3% in March, surpassing the consensus estimate of 54.5%. A level above 50% implies that the manufacturing sector is expanding.
Chair of the Institute for Supply Management, Timothy R. Fiore stated that "comments from the panel reflect continued expanding business strength, supported by gains in new orders and employment. Demand expansion continued, with the New Orders Index returning to the high 50s." Further, continuous improvement in the trade war situation between the United States and China has also benefited trade-sensitive sectors.
Factors Contributing to Growth
The new orders index increased 1.9% to 57.4% in March. Meanwhile, the production index increased from 1% to hit 55.8%. Additionally, the prices index increased by 4.9% to 54.3%, reflecting an increase in input prices for the first time since December 2018.
Notably, the employment index increased by 5.2% to hit 57.5%. This marked its largest increase in the last three years, snapping its streak of three consecutive months of declines.
Of the 18 manufacturing industries that were surveyed, 16 reported growth. These industries included printing and related support activities, textile mills, food, beverage and tobacco products, petroleum and coal products, computer and electronic products, electrical equipment, appliances and components and furniture and related products.
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