Manufacturing Construction Slowed in December

By February 3, 2014Economy

The Census Bureau reported a 5.1 percent decline in manufacturing construction in December. Manufacturing construction fell from an annualized $51.49 billion in November to $48.85 billion in December, its slowest pace in six months. Indeed, manufacturing activity had rebounded in the second half of 2013, peaking at $52.39 billion in September. Weather probably played a role in December’s decline, much as we have seen it hamper activity in other data for the sector.

Overall construction activity edged marginally higher in December, up 0.1 percent. This followed strong gains from September to November, with 2.9 percent growth over that three-month period. The December data reflect stronger growth in residential construction (up 2.6 percent for the month), but weaker private, nonresidential activity (down 0.7 percent).

Indeed, the softness seen in the manufacturing sector extended to other nonresidential businesses, as well. Other types of entities that experienced reduced construction activity in December included amusement and recreation (down 6.0 percent), religious (down 2.0 percent), transportation (down 1.5 percent), and commercial (down 1.0 percent). Segments with increased activity for the month included power (up 1.9 percent), office (up 1.2 percent), and educational (up 0.9 percent) firms, among others.

Stepping back and looking at 2013 as a whole, some sectors increased their construction spending more than others. The largest year-over-year gains were seen in the lodging (up 32.7 percent), transportation (up 24.3 percent), commercial (up 22.7 percent), amusement and recreation (up 15.5 percent), and office (up 15.4 percent) segments. Unfortunately, manufacturing construction declined 1.3 percent over the past 12 months, with the December decrease dragging the year-over-year pace lower.

Meanwhile, public dollars devoted to construction were down 2.3 percent in December, or off 0.7 percent for the year. The December data were mostly lower across-the-board. There were some notable exceptions, including power (up 7.1 percent), highway and street (up 1.8 percent), transportation (up 1.8 percent), and conservation and development (up 0.7 percent). Over the past 12 months, the largest increases in public construction were in the power (up 25.1 percent), highway and street (up 11.3 percent), transportation (up 5.0 percent), and conservation and development (up 4.1 percent) sectors.

Chad Moutray is the 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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