Manufacturing Construction Activity Pulls Back in July

By September 4, 2012Economy

The Census Bureau said that construction spending dropped 0.9 percent in July, its first decline since March. Both residential and nonresidential construction numbers were lower, down 1.6 percent and 0.6 percent, respectively. Private, nonresidential construction fell 1.6 percent. Despite these decreases, construction activity has been pretty robust over the course of the past year, up 9.3 percent since July 2011, and for manufacturers, it was 17.4 percent higher year-over-year.

Still, manufacturers decreased their construction spending from $49.7 billion in June to $48.7 billion in July (at annual rates), a decline of 2.2 percent. This suggests that recent economic weaknesses have impacted construction investments. Most of the other nonresidential sectors also decreased their spending in July, as well. This includes commercial (down 1.9 percent), power (down 1.4 percent), communications (down 1.2 percent), and health care (down 0.5 percent) construction spending. Bucking this trend was the transportation sector, which saw its construction investments up 2.8 percent in July.

Public construction spending was also lower, down 0.4 percent for the month and down 0.7 percent year-over-year. Among the weakest areas for public construction spending in July were conservation and development (down 2.9 percent), water supply (down 2 percent), amusement and recreation (down 1.9 percent), and sewage and water disposal (down 1.5 percent). Public, nonresidential construction spending was higher, though, for health care (up 2.6 percent), office (up 1.1 percent), public safety (up 1.1 percent), and transportation (up 0.7 percent) projects.

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

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