3 Sector ETFs Gaining Despite Weak Manufacturing Data – July 5, 2022


The US ISM manufacturing PMI fell to 53.0 in June 2022 from 56.1 in May, below market forecast of 54.9. The reading marked the weakest growth in factory activity since June 2020.

New orders fell for the first time in two years (49.2 from 55.1), a sign that rising interest rates are hurting demand. In addition, employment continued to decline (47.3 from 49.6), although companies improved their progress in addressing medium-term labor shortages at all levels of the supply chain. ‘supply.

At the same time, supplier deliveries slowed (57.3 vs. 65.7) while production (54.9 vs. 54.2) and inventories (56 vs. 55.9) increased slightly faster and price pressures eased (78.5 vs. 82.2). Although business sentiment remained bullish on demand, supply chain and pricing issues continue to hurt.

Of the 18 manufacturing industries, 15 recorded growth in May, while three recorded contraction. Against this backdrop, we highlight a few ETF areas below that appear to be stable.

Transportation – iShares US Transportation ETF IYT

The industry survey revealed that there is continued strong demand for transportation equipment. The underlying S&P Transportation Select Industry FMC Capped Index (USD) measures the performance of companies in the industrial transportation, airline and general industrial services sectors of the US stock market. The fund charges 41 basis points in fees.

Food & Beverage – Invesco Dynamic Food & Beverage ETF (PBJ Free report)

The Food, Beverages and Tobacco industry survey found that “business is slower than expected in volume, but revenue is on pace [companies’] budget. Sea freight costs are finally starting to come down a bit. [Companies] are already receiving large orders for the fall, which is encouraging.

The underlying Dynamic Food & Beverage Intellidex Index is comprised of stocks from 30 US food and beverage companies. These are companies whose main activity is the manufacture, sale or distribution of food and beverage products, agricultural products and products related to the development of new food technologies. The fund charges 63 basis points in fees.

Fabricated Metal Products – SPDR S&P Metals & Mining ETF (XME Free report)

The Fabricated Metal Products Industry Survey found that “activity is still stable. Some customers postpone orders because they have too much inventory. [Metal companies] are able to fulfill push orders from customers who want theirs sooner, so [companies] do not lose capacity.

The underlying S&P Metals & Mining Select Industry Index represents the metals and mining sub-industry of the S&P Total Market Index. The S&P TMI tracks all US common stocks listed on the NYSE, American Stock Exchange, NASDAQ National Market, and NASDAQ Small Cap exchanges. The Metals & Mining Index is a modified equal-weight index.

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