Manufacturing and construction numbers came in, giving related exchange traded funds (ETFs) a punch to the gut in intraday trading.
U.S. manufacturing activity dropped in February to its lowest point in nearly five years, reports Madlen Read for the Associated Press. Modest growth was reported in January, but the Institute for Supply Management said the index was at 48.3. A reading below 50 indicates contraction. Even though they beat Wall Street’s prediction of 48.1, the numbers aren’t good.
Manufacturers are struggling with the rising cost of raw materials, as well as the slipping housing market.
Related to the dip in manufacturing were construction spending figures from the Commerce Department: they plunged in January by 1.7%, the biggest amount in 14 years. Not only were residential projects scaled back, but spending on hotels, motels, highways and other state and local government projects was curtailed.
Jeannine Aversa for the Associated Press says the numbers were worse than analysts were expecting.
Some construction and housing ETFs aren’t reacting to the bad news too kindly so far today:
- PowerShares Dynamic Building & Construction (PKB)
- SPDR S&P Homebuilders (XHB)
- iShares Dow Jones US Home Construction (ITB)
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