Factories are ramping up production, and it shows in May’s industrial production numbers. Here are five exchange traded funds (ETFs) to keep an eye on as these numbers improve – or falter – in the coming months.
Industrial production rose 1.2% last month, but that number alone does not tell the whole story.
- Factory output, which is the single largest contributor to industrial activity, rose 0.9%. It was the third consecutive monthly increase, reports Daniel Wagner for the Associated Press.
- Warm weather around the country lead more people to fire up their air conditioners, giving way to a 4.8% increase in utilities. [Dividend ETF Plays for Hiked-Up Payouts.]
- Demand for consumer durables such as automobiles and home electronics pushed the sector to a 2.6% gain.
- Mining was the lone laggard in the numbers, declining 0.2%.
The question now is whether this kind of growth can be sustained, especially in light of growing concerns about a debt crisis in Europe and general worries about the strength of an economic recovery in the United States. These ETFs will react to the changes on way or another:
- Utilities Select Sector SPDR (NYSEArca: XLU): Continued warm weather this summer could maintain demand for utilities.
- SPDR S&P Metals & Mining (NYSEArca: XME): Although the miners slowed down this month, sustained industrial activity and economic growth should eventually give them the boost they were looking for this month.
- iShares Dow Jones U.S. Consumer Goods (NYSEArca: IYK): The mood of consumers is improving, they’re spending more slowly but surely. If consumers don’t lose their hard-won confidence, production of the goods they seek may continue apace.
- Market Vectors Steel (NYSEArca: SLX): Steel is a major component of many aspects of industrial production, not least of which is automobiles. Many major auto makers have reported improving sales in recent months. [Why Copper ETFs Are Swooning.]
- ETF Securities Silver Trust (NYSEArca: SIVR): Silver is also a popular component of industrial production, thanks to its many properties, which include: water purification, electrical conductivity and electronics. [5 Reasons for Silver ETFs’ Special Glow.]
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.