Tag Archive for 'manufacturing'

ABC Reports: Nonresidential Construction Spending Flat in February

CEU2“Construction is impacted more by weather than just about any economic segment and the impact of February’s brutal weather is evident in the government’s spending figure.”—ABC Chief Economist Anirban Basu

Spending 4.1.15Blame it on the weather – that is what many economists have been doing over the past two months as economic data continue to disappoint. Retail sales, durable goods orders and other categories have not been as strong as anticipated.

Nonresidential construction has often proved an exception, with the industry’s momentum gaining steam recently. However, in February, nonresidential construction spending remained virtually unchanged inching down 0.1 percent on a monthly basis, according to the April 1 release from the U.S. Census Bureau. The February 2015 spending figure is 4.6 percent higher than February 2014, as spending for the month totaled $611.5 billion on a seasonally adjusted, annualized basis. The estimate for January spending was revised downward, from $614.1 billion to $611.9 billion, while the government revised December’s spending estimate upward from $627 billion to $629.3 billion.

“Construction is impacted more by weather than just about any economic segment and the impact of February’s brutal weather is evident in the government’s spending figure,” said Associated Builders and Contractors Chief Economist Anirban Basu. “ABC continues to forecast robust nonresidential construction spending recovery in 2015 despite the most recent monthly data, with the obvious exceptions of industry segments most directly and negatively impacted by declines in energy prices.

“The broader U.S. economy has not gotten off to as good a start in 2015 as many had expected with consumer spending growth frustrated by thriftier than anticipated shoppers,” said Basu. “With winter behind us and temperatures warming, the expectation is that economic growth will roar back during the second quarter, which is precisely what happened last year. To the extent that this proves to be true, nonresidential construction’s recovery can be expected to persist.”

Seven of 16 nonresidential construction subsectors posted increases in spending in February on a monthly basis.

  • Manufacturing-related spending expanded 6.8 percent in February and is up 37.9 percent on a year-over-year basis.
  • Conservation and development-related construction spending expanded 11 percent for the month and is up 19.8 percent on a yearly basis.
  • Office-related construction spending expanded 2.4 percent in February and is up 19 percent from the same time one year ago.
  • Amusement and recreation-related construction spending gained 2 percent on a monthly basis and is up 22.5 percent from the same time last year.
  • Education-related construction spending grew 0.3 percent for the month, but is down 0.6 percent on a year-over-year basis.
  • Construction spending in the transportation category grew 0.6 percent on a monthly basis and has expanded 9.3 percent on an annual basis.
  • Lodging-related construction spending was up 5 percent on a monthly basis and 10.4 percent on a year-over-year basis.

Spending in nine nonresidential construction subsectors failed to rise in February.

  • Health care-related construction spending fell 0.9 percent for the month and is down 4.5 percent for the year.
  • Spending in the water supply category dropped 7.8 percent from January, but is still 7.4 percent higher than at the same time last year.
  • Public safety-related construction spending lost 2.2 percent on a monthly basis and is down 9.6 percent on a year-over-year basis.
  • Commercial construction spending lost 1.9 percent in February, but is up 13.5 percent on a year-over-year basis.
  • Religious spending fell 4.8 percent for the month and is down 10.3 percent from the same time last year.
  • Sewage and waste disposal-related construction spending shed 1.4 percent for the month, but has grown 19.9 percent on a 12-month basis.
  • Power-related construction spending fell 4.5 percent for the month and is 17.2 percent lower than at the same time one year ago.
  • Lodging construction spending is down 4.4 percent on a monthly basis, but is up 18.2 percent on a year-over-year basis.
  • Sewage and waste disposal-related construction spending shed 7.5 percent for the month, but has grown 16 percent on a 12-month basis.
  • Power-related construction spending fell 1.1 percent for the month and is 13.2 percent lower than at the same time one year ago.
  • Communication-related construction spending fell 6.1 percent for the month and is down 15.5 percent for the year.
  • Highway and street-related construction spending was unchanged in February and is up 3.3 percent compared to the same time last year.

To view the previous spending report, click here.

Wells Fargo Reports: U.S. Economy Flexes Muscles With Surge in Production

Wells_Fargo_Securities_logoIndustrial production surged 1.3 percent in November as October’s initially reported decline was reversed to a slight gain. Manufacturing was the key driver with big gains this month and an upward revision in October.
Strong Report with Broad-Based Gains
The 1.3 percent increase in industrial production for November is the largest monthly pop in more than four years. It comes on the heels of an upward revision that moved last month from a slight decline to a slight gain in output. Manufacturing production was up 1.1 percent on the month with broad-based support. After three straight monthly declines for motor vehicles and parts, that series staged a comeback in November with a 5.1 percent monthly increase. But even excluding autos, manufacturing output was still up 0.9 percent.
The Weather Outside is Frightful
Over 50 percent of the lower-48 was blanketed in snow in November (including more than five feet in parts of Buffalo, NY). It was the largest snow-cover on record for the month of November. With wintry weather showing up in fall, it comes as little surprise that utilities output jumped 5.1 percent on the month.
What About Oil?
Oil prices ended November at roughly $66/barrel, but the average price for the month was still over $75/barrel (WTI crude). The much lower price environment for oil and other commodity prices will eventually cause equipment investment to slow in industries related to oil extraction, in our view. However, we have maintained that production would still hold up in the near term. Mining output fell in November, but oil was not to blame. Crude production was unchanged in November (in fact, it was up 1.1 percent before seasonal adjustment). “Other” mining (coal, metal ore, other minerals) was down 0.5 percent.
Empire Index: A Warning Shot or Just a Misfire?
In a separate report, the New York Federal Reserve’s Empire State manufacturing index unexpectedly slipped to negative territory in December. With all the discussion in financial markets about the impact of lower oil prices, it may feel like this miss is a warning that the factory sector is retrenching. We are not convinced that is what the numbers are telling us. The big movers among the subcomponents sound more like a supply chain disruption than a sudden shift in attitudes because of oil. Unfilled orders were off 24.0 points, delivery times were off 14.6 points and inventories were down 11.5 points. What about prices? How is the input cost side of production shifting? After 10.6 in November, prices paid came in at 10.4 in December, so no significant change. Prices received on the other hand, went from 0.0 last month to 6.3 in December. Still, the miss here in December should not be discounted completely; we will watch other regional Fed survey data for December with greater-than-usual interest.IP_12152014IP_12152014

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ABC Reports: Nonresidential Construction Spending Rebounds in July

CEU2 “Today’s encouraging report provides further evidence that a vigorous nonresidential construction recovery is finally at hand.”—ABC Chief Economist Anirban Basu.

Construction Spending_9 2Nonresidential construction spending expanded strongly in July, growing 2.5 percent on a monthly basis and rising a robust 8.6 percent on a year-over-year basis according to a Sept. 2 release from the U.S. Census Bureau. Spending for the month totaled $617.8 billion on a seasonally adjusted, annualized basis. The government also revised upward a somewhat disappointing June nonresidential construction spending estimate from $589 billion to $603 billion and the estimate for May from $606 billion to $611 billion.

“Today’s encouraging report provides further evidence that a vigorous nonresidential construction recovery is finally at hand,” said Associated Builders and Contractors Chief Economist Anirban Basu. “Increased job growth, booming energy production, expanding industrial production and normalizing capital markets are all contributing to nonresidential construction’s renewed momentum and confidence among developers and other significant consumers of construction services is high, signaling ongoing recovery.

“The economy is recovering rapidly enough to improve real estate conditions in meaningful ways without triggering a shift in the Federal Reserve’s still accommodative policy making,” said Basu. “Both stock and bond markets have been rallying of late, which has helped to generate wealth and lower borrowing costs simultaneously, an ideal situation for construction. Progress has been particularly apparent in power and industrial segments, with year-over-year construction spending up 26 percent in the power category and 24 percent in manufacturing.”

Spending increased on a monthly basis in 11 of 16 nonresidential construction subsectors in July.

  • Office-related construction spending grew by 0.1 percent in July and is up 20 percent from the same time one year ago.
  • Health care-related construction spending grew 1.6 percent for the month, but is down 6.0 percent from the same time last year.
  • Manufacturing related spending grew 4.7 percent on a monthly basis and is up 23.9 percent on an annual basis.
  • Education-related construction spending grew 0.5 percent for the month but is down 1.2 percent on a year-over-year basis.
  • Lodging construction spending is up 2.7 percent on a monthly basis and is up 16.0 percent on a year-over-year basis.
  • Spending in the water supply category expanded 2 percent from June, but is 2.8 percent lower than at the same time last year.
  • Construction spending in the transportation category grew 0.4 percent on a monthly basis and has expanded by 2.2 percent on an annual basis.
  • Amusement and recreation-related construction spending grew 0.2 percent on a monthly basis and is up 12 percent from the same time last year.
  • Highway and street-related construction spending expanded 6.9 percent in July and is up 2.7 percent compared to the same time last year.
  • Public safety-related construction spending gained 3.3 percent on a monthly basis and is up 9.6 percent on a year-over-year basis.
  • Power construction spending gained 7.2 percent for the month and is 25.7 percent higher than at the same time one year ago.

Spending in five nonresidential construction subsectors declined in July.

  • Commercial construction spending fell 2.8 percent in July, but is up 6.9 percent on a year-over-year basis.
  • Communication construction spending fell 1.2 percent for the month and is down 11.3 percent on an annual basis.
  • Religious spending fell 5.1 percent for the month and is down 1.3 percent from the same time last year.
  • Sewage and waste disposal-related construction spending fell 1.4 percent for the month, but has grown 3.1 percent on a 12-month basis.
  • Conservation and development-related construction spending fell 7.1 percent for the month, but is up 24.8 percent on a yearly basis.

To view the previous spending report, click here.

Nonresidential Construction Spending Unchanged in June

“There is little reason to believe that construction spending will either substantially accelerate or decelerate in the near term.” —ABC Chief Economist Anirban Basu.

Total nonresidential construction spending was unchanged in June, as spending remained at a seasonally adjusted annual rate of $570 billion, according to the August 1 report by the U.S. Census Bureau. Year-over-year, total nonresidential construction spending is up 5.4 percent.

Private nonresidential construction spending was up 0.1 percent for the month and is up 14 percent year-over-year. Public nonresidential construction spending was unchanged for the month and is down 3.7 percent from June 2011.

Nine of the sixteen nonresidential construction subsectors posted increases for the month, the largest included communication, up 4.3 percent; lodging, up 3.7 percent; manufacturing, up 3.7 percent; and transportation, up 2.6 percent. Eight subsectors posted increases from one year ago, including lodging, up 23.3 percent; manufacturing, up 19.3 percent; and power, up 19.2 percent.

Seven subsectors saw decreases in spending for the month including water supply, down 4.5 percent; conservation and development, down 4 percent; power, down 3.1 percent; and commercial construction, down 1.9 percent. Since June 2011, construction spending decreased in eight subsectors, including conservation and development, down 18.2 percent; religious, down 5.2 percent; water supply, down 4.2 percent; and amusement and recreation, down 2.3 percent.

Residential construction spending was up 1.3 percent for the month and is 10.7 percent higher than the time last year. Overall, total construction spending – which includes both nonresidential and residential – was up 0.4 percent for the month and 7 percent from June 2011.

Analysis

“Nonresidential construction spending in June was roughly in accordance with expectations,” said Associated Builders and Contractors (ABC) Chief Economist Anirban Basu. “The volume of spending was virtually unchanged for the month, reflecting an economy that is growing slowly, but with an insufficient level of confidence to produce significant numbers of new construction starts.

“However, this does not suggest that the latest reports regarding construction spending were negative,” Basu said. “Nine of sixteen subsectors registered growth for the month, including highly cyclical segments like lodging and manufacturing.

“There is little reason to believe that construction spending will either substantially accelerate or decelerate in the near term,” said Basu. “Most economists expect the U.S. economy will continue to expand at roughly 2 percent, which was approximately the pace of growth registered last year and during the first half of this year.

“However, as the nation approaches the so-called fiscal cliff, when a number of tax increases and spending cuts take effect, there may be a meaningful pullback in activity during the final months of the year,” Basu said. “Many analysts expect Congress to act, but election year dynamics render many possible scenarios.

“A variety of leading indicators pertaining directly to the construction industry also suggest a flat level of spending going forward,” said Basu. “ABC’s Construction Backlog Indicator suggests the industry is not positioned for a surge in construction activity any time soon.”

To view the previous spending report, click here.

US Departments Of Transportation And Commerce Forge Partnership To Boost Domestic Manufacturing Across America

Partnership will help revitalize the domestic railway manufacturing sector, support Obama Administration’s historic investments in transportation and create jobs

U.S. Transportation Secretary Ray LaHood and Acting Commerce Secretary Rebecca Blanktoday announced a partnership to encourage the creation of domestic manufacturing jobs and opportunities for U.S. suppliers through transportation investments.

The Department of Commerce’s Manufacturing Extension Partnership (MEP) will help to ensure manufacturers meet the U.S. Department of Transportation’s (U.S. DOT) strict “Buy America” and “Buy American” standards, connecting U.S. manufacturers and suppliers for work on highways, railways and transit projects, and in the process help to create jobs.

“Investment in transportation is a critical piece of President Obama’s American Jobs Act,” said Secretary LaHood.  “Not only are we improving how we move people and goods, but we are strengthening our economy by providing opportunities for American companies and their employees to build our transportation system here at home.”

With a network in all 50 states and Puerto Rico, MEP serves more than 34,000 American suppliers, helping them to retool their manufacturing capabilities to meet demand, compete in the global marketplace and sell American-made products all over the world.

“This initiative is a win for workers and communities across America,” said Acting Secretary Blank. “The Manufacturing Extension Partnership will connect U.S. manufacturers and suppliers with hundreds of millions of dollars in upcoming highway, railway, and airport projects, providing new job opportunities in every corner of the country.”

MEP will leverage over 1,300 expert manufacturing assistance field staff in over 350 locations to provide knowledge of local manufacturing capabilities from across the nation. MEP will identify suppliers’ production and technical capabilities to match them up with viable business opportunities that may have otherwise gone to foreign suppliers, ensuring maximum economic benefit for taxpayer-funded transportation investments across all modes.

The U.S. Department of Transportation’s Federal Railroad Administration (FRA) will team up with MEP to connect American suppliers with opportunities created by the Obama Administration’s historic investments in high-speed intercity passenger rail, including track and station construction and the development of next-generation trains.  MEP will help DOT to guarantee American companies and workers receive benefits from public investments like the upcoming $782 million order for domestically-built passenger rail trains that will travel in California, Oregon, Washington, Illinois, Missouri, Michigan, Indiana and Iowa.

MEP will also help DOT assure that American companies and workers benefit when the state of California today issues a request for information (RFI) for new bi-level passenger coaches. Responses to the RFI will inform the states of the manufacturer’s capacity to complete the order and identify potential domestic suppliers.  A request for proposals will be issued this winter and winning bids will be selected next summer.

Already, MEP is working with the Federal Transit Administration (FTA) to improve its ability to assess the merits of requests for waivers from Buy America requirements, eliminate the need for some waivers, and strengthen FTA’s support for these requirements. In June, representatives from MEP joined FTA Administrator Peter Rogoff and Deputy Secretary John Porcari for a meeting between transit agencies and rail manufacturers to promote the domestic production of steel rails for streetcar projects.

The Federal Highway Administration (FHWA) will partner with MEP to help identify U.S. manufacturing capabilities to produce new technologies and emerging products for the nation’s highway systems. FHWA tasked MEP to identify U.S. manufacturers with potential production facilities for specialized steel fibers used in ultra high-performance concrete, which is a joint filler material between prefabricated bridge elements. Currently, this steel fiber is only made overseas.

At the U.S. Department of Commerce, the Hollings Manufacturing Extension Partnership (MEP) is part of the National Institute of Standards and Technology, an agency of the U.S. Department of Commerce. MEP is a catalyst for strengthening American manufacturing – accelerating its ongoing transformation into a more efficient and powerful engine of innovation driving economic growth and job creation.

President Obama has called on Congress to pass measures in the American Jobs Act, which invests $50 billion in new transportation construction.  In addition to construction jobs, these investments will pump billions into the domestic manufacturing sector, creating new orders and jobs at American manufacturers and suppliers.

Source: U.S.A. Department of Transportation