Manufacturing Grows For 32 Months: 5 Industrial Stocks To Buy
Zacks Investment Research | May 31, 2019 07:33AM ET
Per the Institute for Supply Management’s latest report, Purchasing Managers’ Index (PMI) for April was at 52.8%. Even though it has dipped from the March reading of 55.3%, the manufacturing sector has been witnessing growth for 32 consecutive months, led by continued expansion in new orders, production activity and employment. The PMI has averaged 57.2% over the last 12 months. Notably, a reading above 50% indicates expansion in manufacturing sector. This instils optimism in the sector.
The New Orders Index registered 51.7% in April, indicating growth in new orders for the 40th consecutive month. Production Index was 52.3% in the month, improving for 32 straight months. The employment index was pegged at 52.4%, maintaining growth for the 31st consecutive month.
Continued improvement in residential and non-residential construction as well as infrastructure demand is driving the sector’s performance. Mining companies are also resuming their capital spending on the back of improvement in commodity prices. Further, the recently-passed tax reform has been acting as a catalyst by expediting manufacturing investment in factories, new equipment and other capital goods. Moreover, the manufacturing companies continue to combat cost inflation through pricing actions, cost control, increasing productivity and eliminating waste.
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