Published on 5 Oct 2021 on Entrepreneur via Yahoo Finance
Despite facing supply chain constraints and Hurricane Ida-related factory shutdowns, the industrial sector’s production has surpassed the pre-pandemic levels by some measures, thanks to substantial government spending. Furthermore, President Biden’s infrastructure bill and the growing external and domestic demand have created optimism around the industrial sector for the first time in months. This should help fundamentally sound industrial stocks like CEMEX (CX), Owens Corning (OC), GMS (GMS), and Huttig Building Products (HBP) deliver solid returns in the upcoming months.
Industrial production increased 0.4% in August and rose 0.3% above its pre-pandemic (February 2020) level despite Hurricane Ida-induced plant closures and the pandemic not being completely over. Some contributing factors are increased government focus on infrastructure, higher capital expenditures, and an expanding global economy. Investor optimism surrounding the industrial sector’s prospects is evident from the Industrial Select Sector SPDR Fund’s (XLI) 28.8% returns over the past year.
Although the ongoing supply chain issues could curb growth, the acceleration in demand for manufacturing, logistic, non-residential, and business outsourcing services should enable the industrial sector to witness a steady growth trajectory. Moreover, President Biden’s infrastructure bill, which is expected to be passed by the end of October, should boost the sector.