Solid progress on the COVID-19 vaccination front, followed by a rebound in economic activities, helped the industrial sector to generate stable growth in the first half of last year. However, global supply chain constraints, high inflation, a slowdown in third-quarter GDP growth, the Federal Reserve’s signal that it will hike interest rates, and the resurgence of COVID-19 cases caused major industrial stocks to close 2021 on a low note. The ISM manufacturing purchasing managers index (PMI) slid to 58.7% in December from 61.1% in November.
Major efforts taken to address the ongoing supply chain crisis, along with the recent passage of the bipartisan infrastructure bill, should help the industrial sector see a solid rebound this year. Investors’ interest in this sector is evident in the Industrial Select Sector SPDR ETF’s (XLI) 13.8% returns over the past year.
