Manufacturing Construction Continues to Grow

By August 1, 2012Economy

The Census Bureau announced that construction spending rose 0.4 percent in June. This was slower than the 0.9 percent and 1.6 percent growth rates observed in April and May, respectively. Public sector spending was flat, with residential construction lifting the overall numbers higher.

Private residential construction rose 1.3 percent for the month, with new housing activity up 12.1 percent year-over-year. Indeed, the still-depressed housing sector has been growing slowly-but-steadily recently, providing a boost to an economy that still has its challenges.

Manufacturing is another area that has been a bright spot, even with recent slowdowns in activity. In June, manufacturers spent $52.1 billion on new construction projects at that annual rate, an increase of 3.8 percent over May’s $50.2 billion level. Since June 2011, spending has risen 19.0 percent.

Private nonresidential construction was up just 0.1 percent overall. Other nonresidential construction expenditures that were higher in June include communication (up 4.6 percent), lodging (up 2.9 percent), educational (up 1.0 percent), and amusements and recreation (up 1.0 percent). These were offset by declines in power (down 3.1 percent) and commercial (down 1.5) construction spending.

Overall, these numbers provide a slight counterbalance to weaker manufacturing data elsewhere. Earlier today the Institute for Supply Management said that the sector was contracting for the second month in a row. And yet, this information suggests that manufacturers continue to invest in their businesses, hoping to take advantage of new opportunities. That, too, is consistent with various regional sentiment surveys, which find guarded optimism over the course of the next six to twelve months and generally predict higher levels of capital spending moving forward.

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) and the Director of the Center for Manufacturing Research for The Manufacturing Institute, 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

Join the discussion One Comment

Leave a Reply