Manufacturing Construction Recovers in September, But Remains Soft

By November 1, 2012Economy

The Census Bureau said that construction spending increased 0.6 percent in September after falling 0.1 percent in August. The gain came mostly from the residential sector, with strong housing construction numbers helping to boost the overall figure. Private, residential construction rose 2.8 percent for the month and was up 20.9 percent year-over-year. Private nonresidential construction was off 0.1 percent, and public construction spending fell 0.8 percent.  This suggests that outside of housing, the overall construction market remains soft.

For manufacturers, construction spending recovered from its decline in August. The sector spent $47.1 billion in September, up from $45.4 billion in August. This was an increase of 3.8 percent for the month. Still, overall activity has fallen in recent months, even with September’s gain. For instance, it was $49.4 billion as recently as June. Manufacturing construction spending is up 1.3 percent since September 2011, well below the 8.8 percent growth year-over-year for the private, nonresidential sector as a whole.

Outside of manufacturing, the strongest monthly private, nonresidential construction spending gains were found in the communications (up 7.0 percent), transportation (up 5.7 percent), and power (up 1.1. percent) industries. The largest declines were found in the following sectors: health care (down 6.3 percent), religious (down 5.3 percent), commercial (down 3.8 percent), amusement and recreation (down 3.2 percent), and lodging (down 2.2 percent).

Public construction spending was mostly lower, with the biggest monthly decline observed in commercial projects (down 14.4 percent). There were gains in public spending for amusement and recreation (up 7.5 percent), power (up 3.6 percent), and conservation and development (up 3.6 percent) sectors. Overall, public construction is down 4.2 percent over the course of the last year, with the steepest declines in office, commercial, and water supply spending.

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

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