Manufacturing activity continues to remain robust
Activity in the manufacturing sector (FXR) continues to remain impressive and promising. The best way to measure the health of this sector is by observing changes in manufacturing employees’ number of working hours. This data is released by the US Bureau of Labor Statistics every month, after its establishment survey. Tracking average hours in the sector gives us an indication of how the industry is expected to grow and future changes in unemployment.
Average weekly hours remained unchanged in July
According to July’s data, production workers’ average working hours remained unchanged at 42.0 hours. The reading for June has been revised upwards from 41.9 to 42.0. As there was been no change in average working hours, this reading did not affect the Conference Board Leading Economic Index (or LEI) in July.
Key industries and ETF performance
The largest ETF by market cap in this sector is the SPDR Industrial Select Sector ETF (XLI), which has posted a year-to-date return of 8.0%. The sector has seen some sell-offs in the last month, losing 2.1% of its value as risk aversion due to geopolitical events dominated markets. This sector comprises big names in manufacturing such as General Electric (GE), 3M (MMM), Boeing (BA), Lockheed Martin (LMT), and United Parcel Service (UPS).
While the sector has witnessed some volatility, production planning has remained constant, indicating that the recent disturbance may not have impacted production plans, at least not in July. In the next part of this series, we’ll analyze how average weekly initial claims have affected the LEI.