Fleet Management

Economic Watch: January Manufacturing Slows, 2013 Construction Explodes

February 03, 2014

By Evan Lockridge

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Photo: Evan Lockridge
Photo: Evan Lockridge
Economic activity in the manufacturing sector expanded in January for the eighth consecutive month, but retreated from levels seen in December, say the nation's supply executives.

The new report from the Institute for Supply Management shows its index registered 51.3%, a decrease of 5.2 percentage points when compared to December's seasonally adjusted reading of 56.5%. A reading above 50% indicates that the manufacturing economy is generally expanding while below 50% indicates that it is generally contracting.

The New Orders Index registered 51.2%, a significant decrease of 13.2 percentage points from December's seasonally adjusted reading of 64.4% while the Production Index registered 54.8%, a decrease of 6.9 percentage points compared to December's seasonally adjusted reading. Inventories of raw materials decreased by 3 percentage points to 44% its lowest reading since December 2012 when the Inventories Index registered 43%.

Of the 18 manufacturing industries, 11 reported growth in January.

“While still positive, manufacturing activity has been losing underlying momentum over the past couple of months suggesting a muted contribution to growth at least in the near term while global and domestic demand continue to recover at an uneven pace,” said Lindsey Piegza, chief economist at the investment firm Sterne Agee. “Global manufacturing overall activity has been mixed with a juxtaposition of strength and weakness across Eurozone economies and Chinese manufacturing declining to a six-month low. In the U.S., extreme weather is thought to have at least in part contributed to a slowdown in production, already heightening expectations for a rebound next month.”

Meantime, a second and separate report also released Monday shows the pace of construction spending in December, slowed from the month before, but still managed to hit its highest level since March 2009.

The U.S. Commerce Department reports an increase of just 0.1% from November, following a downwardly revised 0.8% gain in November from October.

Private residential construction in December jumped 2.6% from the month before, hitting its highest level since 2008, while private nonresidential construction fell 0.7% from November.

For all of 2013, the value of all U.S. construction spending was $898.4 billion, a 4.8% increase above the level in 2012. Private construction for the year increased 8.5% above the 2012 level but public construction fell 2.8%.

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