U.S. Factory Output Rose by the Most in More Than 74 Years

The manufacturing industry took a hit when stay-at-home and social distancing measures put the clamps on manufacturing industries across the nation. However, there are signs of life as U.S. factory output rose by the most in more than 74 years during the month of June.

Per a Reuters report, many “businesses have resumed operations after being shuttered in mid-March in an effort to slow the spread of the coronavirus. But there has been a resurgence in new infections of the respiratory illness, especially in the highly populated South and West, prompting some authorities in these regions to either shut down businesses again or pause reopenings. The economy slipped into recession in February.”

“The manufacturing recovery will proceed at a much slower pace compared to the initial, partial snap-back phase,” said Oren Klachkin, lead U.S. economist at Oxford Economics in New York. “The renewed flaring of virus-related uncertainty will add to significant downside risks from sharply curtailed demand, supply chain disruptions, and heightened economic uncertainty.”

Investors looking to get exposure to the industrial sector can look at the Industrial Select Sector SPDR Fund (XLI). The fund seeks to provide investment results that correspond generally to the price and yield performance of publicly traded equity securities of companies in the Industrial Select Sector Index, which includes securities of companies from the following industries: aerospace and defense; industrial conglomerates; marine; transportation infrastructure; machinery; road and rail; air freight and logistics; commercial services and supplies; etc.

Another option is the Vanguard Industrials Index Fund ETF Shares (VIS), which employs an indexing investment approach designed to track the performance of the MSCI US Investable Market Index (IMI)/Industrials 25/50. The index is made up of large, mid-size, and small U.S. companies within the industrials sector, as classified under the Global Industry Classification Standard (GICS).


^SP15EMSVSI data by YCharts

Investors who want exposure to manufacturing with a technological tilt can look at exchange-traded funds like the Goldman Sachs Motif Manufacturing Revolution ETF (GMAN). GMAN seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the Motif Manufacturing Revolution Index.

The fund seeks to achieve its investment objective by investing at least 80% of its assets in securities included in its underlying index. The index is designed to deliver exposure to companies with common equity securities listed on exchanges in certain developed markets that may benefit from the on-going technology-driven transformation of the manufacturing industry (the “Manufacturing Revolution Theme”).

Using a data-driven approach, the GS Motif ETFs seek to track bespoke1 indices created by Motif, an industry leader in applying data science and automation to thematic investing. Motif analyzes traditional and alternative data and weights companies by a function of ‘thematic beta’ to provide precise exposure to theme.

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