The data center buildout is boosting US manufacturing

US manufacturing expanded for the eighth straight month in August, with the PMI reading at 54.6. This sustained growth, particularly driven by data center construction, suggests a more robust recovery than previously anticipated.

The sector's strength is a positive for the broader economy, though concerns about potential inflationary pressures remain. Investors should watch for any slowdowns linked to opposition to data center builds or supply chain disruptions.

For portfolios, consider shorter-duration fixed income for attractive yields and less rate risk. In equities, diversified holdings with a focus on quality and large-caps may capture upside while mitigating inflation concerns. Keep an eye on the sticky inflation scenario, which would favor quality stocks and short-duration bonds.