4 Top Industrial Stocks To Bet On As U.S Manufacturing Expands

Earlier this year, the COVID-19 pandemic dealt a severe blow to the U.S Manufacturing sector, which had already been reeling under waning global demand and the long-standing U.S.-China trade tensions. The pandemic-induced supply-chain disruptions, factory closures due to government restrictions worldwide, bleak demand as well as volatility in the energy market have battered the sector.

However, the U.S manufacturing sector seems to be gaining momentum, of late, as evident from the pick-up in manufacturing activities over the past few months, spurred by a steady resumption of business, factory operations, and other economic activities. Moreover, uptick in construction demand and various government stimulus packages are bolstering the sector.

Manufacturing Rebounds for 4 Straight Months

Per the Institute for Supply Management, the U.S Manufacturing Purchasing Managers’ Index (PMI) logged 55.4% growth in September, which came a tad below 56% in August — the highest so far in 2020. Notably, a reading above 50 denotes expansion in activity, and the September PMI reading marks expansion in the sector for four consecutive months after remaining below the 50 mark from March to May primarily due to the pandemic. Notably, in April, the PMI index had slipped to 41.5% — the lowest reading since April 2009. Hence, the sector is coming out of the crisis and this recovery holds optimism for overall economic growth, as the manufacturing sector accounts for 11% of the U.S. economy.

Of the 18 manufacturing industries, 14 reported growth in September. The New Orders Index registered 60.2% growth in September, down from August’s 67.6%. The Production Index dipped to 61% from August’s 63.3%. The Employment Index grew to 49.6% in September from 46.4% in August.

Moreover, the IHS Markit reported that the US Manufacturing PMI rose to 53.2 in September from August’s 19-month high level of 53.1. The September reading demonstrates the strongest expansion in factory activity since January 2019.

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