ETF Trends
ETF Trends

Manufacturing activity is expanding at its fastest pace in more than a year. This is not just improved news for the American economy, but it presents an opportunity for some exchange traded funds (ETFs), too.

U.S. manufacturing activity grew in July at the fastest pace in nearly a year, however, housing market data shadowed any glimmer of hope these numbers hold. Overall output at the nation’s factories, mines and utilities rose 1% last month, following a 0.1%in Junes, reports Associated Press. [ETFs Hurt By China’s Trade Numbers.]

A big supporter of this trend was auto plants that stayed open when they normally close for summer renovations and businesses replaced worn-out equipment. This boosted factory output by 1.1%, which is the largest increase since last August. [Are Transportation ETFs Getting Bullish?]

ETFs to play it:

  • First Trust ISE Global Copper (NASDAQ: CU): This ETF, which holds copper miners, benefits as demand for copper soars. Copper is used in pipes and wiring in new buildings.
  • Market Vectors Steel (NYSEArca: SLX): Steel? You can’t do many things without it, including building cars and constructing buildings. It’s the backbone of many developing (and developed) economies.
  • iShares Dow Jones Transportation Average Index Fund (NYSEArca: IYT): Materials used in construction have to get from point a to point b, and one of the most fuel efficient ways is via rail.
  • Claymore Delta Global Shipping (NYSEArca: SEA): Other countries are building up and seeing manufacturing activity pick up the pace. As they import more raw materials and export finished products, shipping is the transportation mode of choice.
  • iShares FTSE NAREIT Residential (NYSEArca: REZ): 44.3% of REZ is apartment REITs.

Tisha Guerrero contributed to this article.

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.