Published on 4 Oct 2021 on Zacks via Yahoo Finance

Will Industrial ETFs Make Good Bets? Let's Find Out

The industrial sector has been attracting investor attention as the gradual reopening of U.S. and global economies highlights brighter prospects. The S&P 500 Industrials index has already returned 29.3% in the past year compared with the S&P 500’s 28.9% rise.

The latest ISM Manufacturing Purchasing Managers' Index (PMI) data for the United States paints a rosy picture for the industrial sector. The metric rose to 61.1% in September from 59.9% in August and surpassed forecasts of a decrease to 59.6, per a Reuters article. Any reading above 50% indicates expansion in U.S. manufacturing activities. Notably, the manufacturing sector, which makes up 12% of the U.S. economy, saw the reading rise forthe 16th consecutive month. 17 out of 18 manufacturing industries witnessed growth in September. The New Orders Index remained flat at 66.7%. The Supplier Deliveries Index reading was 73.4%, increasing 3.9 percentage points from the August figure.

In another positive development, optimism surrounding the news highlighting positive updates on Merck (MRK) and Ridgeback Biotherapeutics’ investigational oral antiviral medicine, molnupiravir, can support the sector. The update supports the spaces, which are expected to gain from the reopening of economies as the molnupiravir will help fight against COVID-19, if approved by the FDA.