Manufacturing Construction Pulled Back in November, Remained Strong Year-Over-Year

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The Census Bureau said that private manufacturing spending fell 4.0 percent in November. The value of private construction put in place in the manufacturing sector declined from $87.04 billion at the annual rate in October to $83.59 billion in November. There has been a bit of volatility from month-to-month in this figure since reaching an all-time high in May of $89.65 billion. Nonetheless, the larger story has been an extremely positive one, with year-over-year growth of 28.8 percent, up from $64.91 billion in November 2014. Indeed, the current reading on manufacturing construction activity closely matches the 2015 year-to-date average of $83.46 billion, up from an average of $57.03 billion for all of 2014. Much of the recent growth in manufacturing construction has stemmed from investments made in the chemical sector, which continues to benefit from cost advantages in the energy sector.

Beyond manufacturing, construction spending was soft in November overall, down 0.4 percent, and private, nonresidential activity was off 0.7 percent. Private residential construction was the lone bright spot, up 0.3 percent for the month. With that said, the year-over-year numbers reflected sharp gains. Total construction spending increased 10.5 percent over the past 12 months, with private sector residential and nonresidential activity up 10.8 percent and 13.6 percent, respectively. Meanwhile, public sector construction declined 1.0 percent in November, but rose 6.0 percent year-over-year.

Looking more closely at private nonresidential construction, the underlying data were mixed. Other sectors experiencing declines for the month included religious (down 3.7 percent), lodging (down 1.2 percent), commercial (down 0.9 percent), power (down 0.9 percent) and educational (down 0.3 percent). In contrast, dollars devoted to communication (up 4.7 percent), transportation (up 3.1 percent), amusement and recreation (up 2.4 percent), office (up 1.7 percent) and health care (up 0.6 percent) projects increased in November.

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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