Tag: construction spending

Manufacturing Construction Rose 3.8 Percent in January

The Census Bureau reported a 3.8 percent increase in manufacturing construction in January, more than offsetting the 3.4 percent decline of December. Manufacturing construction activity increased from $49.2 billion in December to $51.1 billion in January, its highest level since September. The sector has made significant gains over the past 12 months, particularly in the second half of 2013, with 7.9 percent year-over-year growth in construction spending. In January 2013, manufacturers put $47.3 billion of construction in place, but that fell to $43.3 by June before rebounding again starting in July.

Overall construction activity was only marginally higher in January, up 0.1 percent. It would have been higher if it were not for a sharp 0.8 percent decline in public construction spending for the month. The strongest element in this report was private sector residential construction, with a 1.1 percent increase in January and 14.6 percent year-over-year growth. In a sign of just how much the housing market has improved recently, private residential spending rose from $314.0 billion in January 2013 to $359.9 billion in January 2014, the highest level since May 2008.

Looking at private, nonresidential construction, manufacturing’s increase was the exception for the month, with spending down 0.2 percent. The other sector to experience an increase in construction in January was communications (up 18.2 percent). Organizations with the largest monthly declines were power (down 5.0 percent), religious (down 2.6 percent), commercial (down 2.2 percent), healthcare (down 1.6 percent), educational (down 1.3 percent), transportation (down 1.0 percent), and amusement and recreation (down 0.9 percent). On a year-over-year basis, the story was better, with a 9.7 percent increase over the past 12 months.

Chad Moutray is the chief economist, National Association of Manufacturers.

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Monday Economic Report – February 10, 2014

Here is the summary for this week’s Monday Economic Report:

Hiring in the manufacturing sector continued to expand in January, averaging 15,500 per month since August. This uptick in employment for manufacturers has corresponded to the acceleration in product demand and production in the second half of 2013, with cautious optimism for 2014. However, the overall jobs numbers were disappointing for the second straight month. Nonfarm payrolls grew by just 75,000 and 113,000 in December and January, respectively, which was well below the consensus expectation of 175,000 and the 2013 average monthly gain of 193,500.

Some of the releases out last week show the negative impact that weather has had on activity. For instance, new factory orders declined 1.5 percent in December, with broad-based weaknesses in the durable goods sector pulling the data lower. Shipments were also down. Likewise, manufacturing construction spending fell 5.1 percent in December, which was notable because of a mostly upward trend from June to November. Overall construction activity edged marginally higher in December, boosted by strong residential construction activity, but nonresidential and public spending was down.

The Institute for Supply Management’s Purchasing Managers’ Index (PMI) report showed a considerable decline in manufacturing sentiment, down from 56.5 in December to 51.3 in January. The biggest declines were in new orders, output and employment, but the pace of export orders was off only slightly. The pace of export orders was off only slightly. This indicates that domestic factors were the main contributors of the decline.

Meanwhile, the U.S. trade deficit rose from $34.56 billion in November to $38.70 billion in December, but the deficit narrowed for 2013 as a whole. Petroleum was a major factor in the smaller trade deficit last year, with increased petroleum exports and fewer imports. Unfortunately, manufactured goods exports did not increase as much last year as we would have preferred, up just 2.4 percent in 2013 versus 5.7 percent in 2012. We hope stronger global economic growth will produce improved manufactured goods exports in 2014.

In other news, the Congressional Budget Office released its 10-year budget and economic outlook. The deficit will be $514 billion in fiscal year 2014, an improvement from the more than $1 trillion deficits in fiscal years 2009–2012 and the $680 billion deficit in fiscal year 2013. The report shows the growth of mandatory spending rising from $2.03 trillion in fiscal year 2013 to $3.74 trillion in fiscal year 2024. Because of this, federal deficits will start to rise again beginning in fiscal year 2017, with deficits exceeding $1 trillion in fiscal year 2022. With such facts, it should not be a surprise that 86.3 percent of manufacturers want policymakers to find a long-term federal budget deal that tackles the debt and deficit, including reining in entitlements.

This week, we will get new industrial production data on Friday. The last report showed manufacturing output rising at an annualized 4.2 percent rate in the second half of 2013, but we will see if the data show production easing somewhat in January due to weather or other factors. The consensus expectation is for modest output gains of roughly 0.3 percent. Other highlights will be the latest figures on consumer confidence, job openings, retail sales and small business optimism.

Chad Moutray is the chief economist, National Association of Manufacturers.

cbo entitlement spending - feb2014

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Manufacturing Construction Slowed in December

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. 

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Manufacturing Construction Spending Has Increased for Five Straight Months

The Census Bureau reported that manufacturing construction activity increased an annualized 1.2 percent in November. Manufacturing construction spending rose from $53.93 billion in October at the annual rate to $54.58 billion in November. It has risen for five straight months, increasing from $43.34 billion in June, the lowest point of the year.

Manufacturing construction has averaged $48.97 billion in the first 11 months of 2013. The sector has invested 15.6 percent more on a year-over-year basis, up from $47.23 billion in November 2012. Over a longer time horizon, manufacturers have steadily increased their construction spending dollars after bottoming out in January 2011 at an annualized $28.84 billion pace.

Total construction spending rose by 1.0 percent in November, and it has grown by 5.9 percent year-over-year. The bulk of that growth stemmed from residential construction spending, with the rebound in the housing market helping to propel overall activity higher. Dollars devoted to private, residential construction spending increased 16.6 percent since November 2012, rising 1.9 percent for November 2013 alone.

Private, nonresidential construction has risen more modestly lately, up 2.7 percent in November and just 1.0 percent over the past 12 months. In addition to manufacturing activity, other sectors with higher construction spending for the month included communication (up 11.2 percent), commercial (up 4.7 percent), transportation (up 4.7 percent), office (up 4.6 percent), and power (up 3.3 percent). In contrast, educational institutions (down 3.1 percent) and health care facilities (down 1.2 percent) experienced declines in construction spending.

Meanwhile, public dollars devoted to construction were off 1.8 percent for the month and were down 0.2 percent year-over-year. The November data were mostly lower across-the-board, with the exception of power (up 1.6 percent), educational (up 1.1 percent), and commercial (up 0.2 percent) projects. Over the past 12 months, the largest increase in public construction spending was in the transportation sector (up 5.2 percent), with the greatest declines seen in for commercial (down 27.7 percent) and office (down 12.9 percent) developments.

Chad Moutray is the chief economist, National Association of Manufacturers.

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Manufacturing Construction Spending Rose 1.3 Percent in October

The Census Bureau reported that manufacturing construction activity increased an annualized 1.3 percent in October. Manufacturing construction spending rose from $48.08 billion in September at the annual rate to $48.69 billion in October. Since January, we have seen modest gains in construction spending in the sector, up 2.9 percent, but there has also been a high degree of volatility.

Manufacturing construction dollars have ranged this year from a low of $43.34 billion in June to a high of $50.52 billion in August. Over a longer time horizon, one can easily see the rebound in the sector, with construction spending up 12.3 percent and 37.9 percent over the past 24 and 36 months, respectively.

Total construction spending increased 0.8 percent in October, improving upon the 0.3 percent decline in September. The higher number in October came mainly from the public sector, with construction funding by all levels of government jumping 3.9 percent for the month. It had fallen 1.9 percent in September. On a year-over-year basis, the largest increases in public construction spending have been for power (up 10.8 percent), water supply (up 10.2 percent), highway and street (up 9.2 percent), transportation (up 6.9 percent), and sewage and waste disposal (up 6.2 percent) projects.

In contrast, public dollars devoted to commercial (down 28.6 percent) and office (down 14.1 percent) spending projects have declined sharply over the past 12 months. Nonetheless, those two categories have seen improvements lately, up 3.5 percent and 8.8 percent, respectively, in October.

Private residential construction was off 0.5 percent in October, and it has generally struggled since June. Over the past four months, residential activity declined 2.4 percent. Much of that decline can be attributed to the “sticker shock” of higher mortgage rates, albeit at levels that are still historically low. On the bright side, however, the housing market continues to reflect its recent rebounding, with year-over-year increases in private residential construction of 17.8 percent.

Private nonresidential construction spending was also lower, down 0.5 percent in October. In addition to the increase in manufacturing activity, other sectors with higher construction spending for the month included educational institutions (up 6.6 percent), commercial (up 2.8 percent), and transportation (up 2.2 percent), among others. These were offset, though, by declining spending in the following sectors: communication (down 8.4 percent), power (down 5.7 percent), and amusement and recreation (down 2.3 percent).

Chad Moutray is the chief economist, National Association of Manufacturers.

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Manufacturing Construction Spending Declined in June

The Census Bureau said that overall construction spending fell 0.6 percent in June, with weaknesses in both the residential and nonresidential sectors. Despite a very healthy gain in residential activity of 17.6 percent over the past 12 months, it was 0.1 percent lower in June. This somewhat mirrors earlier findings on lower housing starts and permits — a decrease possibly influenced by higher mortgage rates. That report suggested that the decline in new residential construction activity was primarily in the multi-family units segment.

Meanwhile, the level of manufacturing construction projects decreased from $45.9 billion in May to $45.1 billion in June. This was off from $49.5 billion in December, suggesting a drop of 8.9 percent year-to-date. The December figure was a bit of an outlier, though, and the year-over-year decline was a more modest 1.9 percent. Either way, it is clear that there has been a pulling back in construction investment in the first half of 2013.

For the larger private, nonresidential sector, spending declined 0.9 percent for the month, with year-over-year growth of 1.4 percent. The largest monthly increases were in the power, communications, and transportation sectors. In contrast, religious, educational, amusement and recreation, and lodging entities reduced their construction spending in June.

In terms of public construction projects, there were decreases of 1.1 percent for the month, or 9.3 percent lower year-over-year. There was lower spending found in the conservation and development, water supply, sewage and waste disposal, and public safety. These were somewhat counteracted by increases in power, office, health care, and commercial developments, among others.

Chad Moutray is the chief economist, National Association of Manufacturers.

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Monday Economic Report – June 10, 2013

Here is the summary from this week’s Monday Economic Report:

On many levels, last week’s economic indicators confirmed weaknesses in the manufacturing sector. The Institute for Supply Management’s (ISM) Purchasing Managers’ Index (PMI) dropped below 50—the threshold for growth—for the first time since November. New orders and production levels contracted, with hiring stalled. Some respondents cited softness in export sales, while others noted weaker domestic demand stemming from government spending cuts, higher payroll taxes and other uncertainties.

On the trade front, manufactured goods exports have grown very slowly in 2013, up less than 1 percent in the first four months relative to the same time frame in 2012. In April, goods imports outpaced exports, widening the deficit from $37.1 billion to $40.3 billion. Europe’s recession, in particular, has decreased sales overseas for our products, with sluggish growth elsewhere in many of our key markets.

These struggles have lessened businesses’ ability to bring on new workers. Manufacturing employment fell by 8,000 workers in May, the third consecutive monthly decrease. The sector has added 41,000 net new employees over the course of the past 12 months, just 1.9 percent of all nonfarm workers created in the economy. That pace is disappointing and a sign that we need the manufacturing economy to flourish again. While manufacturers were making outsized gains to output and employment as recently as a year ago, that pace has stagnated since then. As NAM President and CEO Jay Timmons noted in February in Detroit, a flourishing sector would yield an average of 20,000 new manufacturing workers each month. (continue reading…)

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Manufacturing Construction Spending Fell in April

The Census Bureau reported the total construction spending rose 0.4 percent in April. This was below the 0.8 percent consensus estimate, with a decline in residential construction activity and reduced spending from manufacturers. Private sector housing construction spending declined 0.2 percent for the month but has increased a whopping 18.3 percent since April 2012. This pullback mirrors the decline in new housing starts reported a couple weeks ago. Despite April’s decrease, though, residential construction remains one of the brighter spots in the economy.

Meanwhile, manufacturing construction spending fell 2.6 percent, down from an annualized $50.2 billion in March to $48.9 billion in April. Year-over-year, manufacturers have added just over $1 billion to their construction spending activity put in place, a gain of 2.2 percent. Still, this is not totally a fair way of presenting the annual change, as there has been a high degree of volatility in this figure over much of that time. The average for 2012 was $48.00 billion and peaked at $52.2 billion in December.

Overall private, nonresidential activity rose 2.2 percent, the first increase since December. The largest gain was in the power sector, with construction activity in that segment up 10.8 percent. Year-over-year growth in that power industry, though, was down 2.8 percent. Other nonresidential areas with higher construction spending in April included amusement and recreational (up 3.5 percent), educational (up 2.9 percent), and transportation (up 1.5 percent) entities. In addition to manufacturing, there was reduced monthly construction investment among religious (down 11.5 percent), communication (down 4.1 percent), and office (down 2.1 percent) institutions.

Meanwhile, public construction spending was down 1.2 percent in April and 5.1 percent year-over-year. Dollars spent on public residential projects were off 5.4 percent for the month, with nonresidential spending down 1.1 percent. The largest monthly gains were in commercial (up 8.2 percent), sewage and waste disposal (up 6.8 percent), and public safety (up 5.5 percent) projects. In contrast, the power (down 13.3 percent), conservation and development (down 5.7 percent), and educational (down 4.4 percent) sectors had the greatest declines in public construction spending in April.

Chad Moutray is chief economist, National Association of Manufacturers.

 

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Nonresidential Construction Edges Up Slightly

The Census Bureau said that construction spending rose 1.2 percent in February, recovering somewhat from the 2.1 percent drop in January. The strongest component of this growth stemmed from the residential sector, with private, residential housing construction up 2.2 percent in February and 20.1 percent year-over-year. This continues a strong rebound in the housing sector, which we see in starts and permits data, as well.

Meanwhile, private, nonresidential construction edged higher by just 0.4 percent in February, only partially improving after the significant 5.9 percent drop in January. The longer-term trend for nonresidential construction, though, reflects steady gains since the beginning of 2011. Since January 2011, the value of private, nonresidential construction has grown from $226.8 billion to $309.6 billion, or an increase of 36.5 percent. (New housing construction in the private sector rose 27.6 percent over the same time period from $237.7 billion to $303.4 billion.)

Manufacturing activity improved slightly in March, up from $51.115 billion to $51.273 billion, or 0.3 percent. The higher value was due to increased construction in the food and beverage, chemical, and fabricated metal products sectors. However, this was counteracted by some declines in the plastics and rubber, nonmetallic mineral, computer and electronic products, and transportation equipment sectors. Similar to the overall nonresidential data, manufacturing construction has moved generally higher over the past two year, up from $29.525 billion in January 2011 or an increase of 73.7 percent. As the attached chart shows, however, this is still below the peak level of $65.022 billion in February 2009.

Beyond manufacturing, other nonresidential business segments with increased construction in February included the following: lodging (up 4.8 percent), health care (up 3.1 percent), educational (up 2.7 percent), and power (up 0.7 percent). Declining levels of construction were seen among communications (down 9.2 percent), transportation (down 2.4 percent), religious (down 1.2 percent), and amusement and recreation (down 1.1 percent) firms. Public construction activity increased 0.9 percent for the month, but it has fallen 1.5 percent year-over-year.

Chad Moutray is chief economist, National Association of Manufacturers.

 

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Manufacturing Construction Recovers in September, But Remains Soft

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.

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