The U.S. manufacturing sector has continued to show growth over the months, indicating that the economy is on solid ground despite growing inflationary fears.
The manufacturing sector continued to expand in May, although the supply-chain crisis and labor shortage are posing as challenges for manufacturers.
The jump in May is also an indication that the sector has the potential to perform successfully despite a number of obstacles.
Thus, funds like
Fidelity Select Automotive Portfolio
(FSAVX - Free Report)
, Fidelity Select Retailing Portfolio
(FSRPX - Free Report) and
Fidelity Select Transportation Portfolio
(FSRFX - Free Report) are likely to benefit in the near term.
The Institute for Supply Management (ISM) Manufacturing Index for May came up with a reading of 56.1 %, up 0.7% from April’s reading of 55.4%.
Following a contraction in April and May 2020, when industries had to be shut down due to the pandemic's introduction, manufacturing activity has now increased for 24 straight months.
May’s jump once again showed the underlying strength in the country’s economy as people continued to spend despite rising costs.
The manufacturing sector managed to expand amid the ongoing challenges like labor shortage and supply-chain crisis.
One of the primary reasons for this is soaring demand for goods and consumption, which is driving production at U.S. factories.
The Production Index in May rose to 54.2%, reflecting a jump of 0.6% from April’s reading of 53.6%.
We have, thus, selected three mutual funds with significant exposure to the manufacturing sector, each carrying a Zacks Mutual Fund Rank #1
(Strong Buy) or 2 (Buy) that are poised to gain from such factors. Moreover, these funds have encouraging three and five-year returns.
Additionally, the minimum initial investment is within $5000.