Even though broader economic growth in the United States has slowed down of late amid the coronavirus outbreak with employment gains diminishing and consumer outlays declining, manufacturing continues to remain a bright spot. Industrial production, in particular, showed signs of improvement despite an alarming rise in coronavirus cases.
Industrial production, in fact, increased at a seasonally adjusted rate of 1.6% in December, according to the
Federal Reserve. The gain was well above analysts’ expectations of a gain of 0.5% and was also the largest since July. Notably, December’s gain followed a 0.5% increase in industrial production in November and a 1% rise in October.
By the way, industrial production that measures factory, mining, and utility output rose 0.9% in manufacturing, 1.6% in mining, and 6.2% in utilities last month. For the fourth quarter, industrial production jumped at a seasonally adjusted rate of 8.4%, the Fed reported.
Nonetheless, manufacturing output that constitutes the bulk portion of industrial production did recoup much of the losses in the final quarter of 2020. Lest we forget, factory output took a severe beating during the earlier part of last year as the coronavirus pandemic ravaged the economy, compelling the government to initiate a lockdown.
Production, by the by, mostly picked up in the utilities segment last month as demand for heating improved significantly, thanks to a warmer-than-expected November, the Fed report confirmed. Mining output, in the meanwhile, gained on improvement in extraction and drilling activities that overshadowed declines in other areas.
It’s worth pointing out that industries’ production capacities improved last month. U.S. industries operated at a 74.5% capacity last month, up from 73.4% in November, per the Fed report. Individually, the capacity utilization rate for manufacturing came in at 73.4% in December, a remarkable 13.3% rise from its trough in April. Separately, capacity utilization rates for mining and utilities climbed to 80.5% and 74.5%, respectively.
5 of the Best Industrial Stocks to Buy Right Away
December’s top-line industrial production numbers no doubt indicate that the manufacturing sector continues to display strength amid a surge in coronavirus cases and hiccups in vaccination campaigns that could easily derail the ongoing economic recovery.
Institute of Supply Management (ISM) confirmed that its manufacturing index jumped to 60.7% in December from 57.5% in November and touched its highest level in nearly two and a half years. What’s more, new orders, production, and employment indexes showed signs of improvement last month, a tell-tale sign that the manufacturing sector is well-poised to weather the coronavirus storm this year as well.
On that positive note, we have highlighted five solid industrial stocks that are positioned to make the most of the strength in the manufacturing sector and scale northward this year. These stocks currently flaunt as Zacks Rank #1 (Strong Buy). You can see
the complete list of today’s Zacks #1 Rank stocks here. Myers Industries, Inc. ( MYE Quick Quote MYE - Free Report) is a manufacturer of polymer products for industrial, agricultural, automotive, commercial, and consumer markets. The Zacks Consensus Estimate for its current-year earnings increased nearly 14%. The company’s expected earnings growth rate for the current year is 16.5%. Deere & Company ( DE Quick Quote DE - Free Report) is currently the world’s largest producer of agricultural equipment, manufacturing agricultural machinery since 1837 under the iconic John Deere brand with its signature green and yellow color scheme. The Zacks Consensus Estimate for its current-year earnings has advanced26.3%. The company’s expected earnings growth rate for the current year is 50.9%. Graham Corporation ( GHM Quick Quote GHM - Free Report) designs and builds vacuum and heat transfer equipment for process industries and energy markets worldwide. The Zacks Consensus Estimate for its current-year earnings has risen3%. The company’s expected earnings growth rate for the current year is 21.4%. AGCO Corporation ( AGCO Quick Quote AGCO - Free Report) is a leading manufacturer and distributor of agricultural equipment and related replacement parts. The Zacks Consensus Estimate for its current-year earnings has risen4.9%. The company’s expected earnings growth rate for the current year is 21.1%. Mueller Industries, Inc. ( MLI Quick Quote MLI - Free Report) is a leading manufacturer of copper tube and fittings; brass and copper alloy rod, bar and shapes; aluminum and brass forgings; aluminum and copper impact extrusions. The Zacks Consensus Estimate for its current-year earnings has risen more than 100%. The company’s expected earnings growth rate for the current year is almost 17%. These Stocks Are Poised to Soar Past the Pandemic
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