XLI holds the industrials sector of the S&P 500: aerospace and defense, machinery, electrical equipment, airlines, railroads, logistics and construction and engineering firms. The sector is cyclical and has typically done well when manufacturing output is growing and capital investment is increasing. Defense companies are driven partly by government budgets and geopolitical conditions rather than only by the economic cycle. Infrastructure and construction spending programs can support demand for engineering and construction companies over several years. The Purchasing Managers Index (PMI) is a commonly followed indicator for the sector, with readings above 50 indicating expanding manufacturing activity.
