U.S. Manufacturing Activity Nudges Up: 3 Fund Picks

The Institute for Supply Management (ISM) stated that its manufacturing index increased for the 115th month on the trot in November.

Such an increase was achieved on the back of a spurt in new orders despite the burden of tariffs and a paucity of skilled manpower. Meanwhile, a temporary ceasefire was concluded between the United States and China over the weekend. Under such encouraging circumstances, betting on mutual funds with significant exposure to the manufacturing sector would fetch alluring returns.

Manufacturing Activity Rebounds in November

The ISM Manufacturing Index increased to 59.3% last month, 1.6% higher than the level of 57.7% registered in October, the lowest recorded in 18 months. A level above 50% implies that the manufacturing sector is expanding.

Such encouraging developments point toward the fact that American manufacturing continues to grow despite tariff pressures and labor shortage. This is in keeping with the broader economy, which grew at a 3.5% pace in the third quarter, per the latest estimate.

Factors Contributing to Growth

The new orders index increased by 4.7% to 62.1% in November. The Production Index advanced 0.7% to 60.6% last month. As a result, the manufacturing sector stepped up hiring or encouraged existing workers to put in additional hours overtime. Consequently, the Employment Index increased 1.6% to 58.4%.

Of the 18 manufacturing industries that were surveyed, 13 reported growth. These industries include textile mills, miscellaneous manufacturing, plastics & rubber products, computer & electronic products, machinery, apparel, leather & allied products and paper products, among others.

3 Best Funds to Buy Now

Given such positives, we have highlighted three mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) that are poised to gain from such factors. Moreover, these funds have encouraging three and five-year returns. Additionally, the minimum initial investment is within $5000.

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