Manufacturing Sector Tops Estimates In January As New Orders Climb, Prices Rise: Why It's Bad News For Inflation
Portfolio Pulse from Piero Cingari
The U.S. manufacturing sector showed signs of resurgence in January, with the S&P Global US Manufacturing PMI and the ISM Manufacturing PMI both indicating a robust rebound in new orders and rising costs of raw materials. This recovery, however, could contribute to inflationary pressures due to increased prices for raw materials. The Materials Select Sector SPDR Fund (XLB) saw a slight increase in its trading price amidst these developments.
February 01, 2024 | 4:04 pm
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POSITIVE IMPACT
The Materials Select Sector SPDR Fund (XLB) experienced a 0.5% increase in trading price, potentially influenced by the reported resurgence in the U.S. manufacturing sector and the associated inflationary pressures from rising raw material costs.
The positive performance of the manufacturing sector, as indicated by the S&P Global US Manufacturing PMI and the ISM Manufacturing PMI, suggests a potential increase in demand for materials, which could benefit funds like XLB that focus on the materials sector. However, the inflationary pressures from rising raw material costs could also pose risks to the sector's profitability and, by extension, to XLB's performance.
CONFIDENCE 85
IMPORTANCE 70
RELEVANCE 80