Manufacturing Construction Spending Drops in January

The Census Bureau announced that construction spending fell 0.1 percent in January, reversing the stronger 1.9 percent and 1.4 percent gains in November and December. Private sector construction was unchanged for the month, but manufacturing construction was down nearly 6 percent.

The drop in manufacturing spending appears to be the result of a surge in activity in December. For the last three months (November to January), manufacturers spent $40.2 billion, $42.9 billion, and $40.4 billion, respectively, on construction projects. Hence, the longer-term trend has been mostly higher, so December’s figure appears to be an outlier. Construction expenditures were $29.2 billion in January 2011, for instance, suggesting an increase of 38.5 percent.

Nonresidential construction overall dropped 1.5 percent. This was led by manufacturing, lodging (down 3.1 percent), religious (down 3 percent), transportation (down 2.1 percent) and power (down 1.8 percent) institutions. Partially offsetting these declines were increases in construction for educational and health care businesses (both up 1.7 power).

Residential construction was up 1.8 percent in January, continuing a positive trend for the year. Since January 2011, residential spending is up 6.7 percent. Public construction was down 0.2 percent, with a year-over-year decline of 0.5 percent. Infrastructure, educational and residential projects experienced the largest declines over the past year.

Chad Moutray is chief economist, National Association of Manufacturers

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM), where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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