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Released November 04, 2024 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--Manufacturing activity in the U.S. reached its lowest level in 2024, according to a survey report by the Institute for Supply Management (ISM), as demand continues to take a hit. Still, Industrial Info's Global Market Intelligence (GMI) Project Database shows strong manufacturing project activity.
The ISM's Purchasing Manager's Index (PMI), which tracks 18 industry sectors in the U.S., registered 46.5% in October, down from 47.2% in September and the readings in every month of the year up to that point (for example, 46.8% in July, 48.7% in May, 49.2% in April and 50.3% in March); March's reading indicated the first expansion for U.S. manufacturing activity since September 2022. Any reading under 50% indicates contraction in the manufacturing economy.
In a related summary of findings, Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee, said, "Demand remains subdued, as companies continue to show an unwillingness to invest in capital and inventory due to concerns (for example, inflation resurgence) about federal monetary policy direction in light of the fiscal policies proposed by both major parties. Production execution eased in October, consistent with demand sluggishness."
He said the drop in demand was evident in the New Orders Index's continued contraction; moderate contraction for the New Export Orders Index; and the Backlog of Orders Index "dropping further into strong contraction territory."
That sentiment was reflected in comments from respondents in the PMI's respective manufacturing industries. One from Transportation Equipment said, "Market demand has significantly decreased in the second half of 2024 and is expected to be soft through the first quarter of 2025. Although inflation has stabilized and returned to historical levels, and interest rates are decreasing, there appears to be a general pessimism in the economy that is driving customers to be more restrictive in their capital expenditures ... Uncertainty in the outcome of the upcoming election has resulted in several risk analysis studies to be prepared, particularly focused on the future of the electric vehicle (EV) migration and trade restrictions/penalties."
Another from Fabricated Metal Products said, "business levels remain depressed. It feels like a 'wait and see' environment regarding where the economy is heading; customers don't want to commit to inventory, which is resulting in lower order levels."
Despite any headwinds affecting U.S. manufacturing activity and related capital investments, Industrial Info is tracking more than $400 billion worth of U.S. Industrial Manufacturing Industry projects under construction, about one-third of which is attributed to the production of semiconductors. Subscribers to the Industrial Manufacturing GMI Database can click here for a full list of projects.
Among the semiconductor-manufacturing projects is Robert Bosch GmbH's (Gerlingen, Germany) $1.5 billion modernization of its plant in Roseville, California. The plant produces and tests 200-millimeter silicon carbide semiconductor wafer chips--a key building block for EVs. The project entails modernizing the existing manufacturing buildings, performing retooling and equipment modifications and upgrading existing production lines, among other work. Robert Bosch expects first production in 2026. Subscribers can click here to read the project report.
Two other manufacturing sectors with a high investment value are automotive and data centers. Activity in the automotive sector is buoyed by EV production and related batteries and other components. Related projects include Envision AESC's (Japan) buildout of a multi-phase EV battery-manufacturing gigafactory in Florence, South Carolina, which is designed to produce at least 30 gigawatt-hours (GWh) worth of batteries annually--with first production expected in 2027. Subscribers can read more information on the grassroot and expansion projects.
Much of the data center project activity is attributed to tech giants, and a major factor driving construction is the rise of artificial intelligence (AI). Google, through its parent company Alphabet Incorporated (NASDAQ:GOOGL) (Mountain View, California), is expanding a data center campus in Council Bluffs, Iowa, by adding a new 288,530-square-foot building. Meanwhile, Microsoft Corporation (NASDAQ:MSFT) (Redmond, Washington) is building the first two data center buildings (MKE 03 and 04) at its planned campus in Mount Pleasant, Wisconsin. Subscribers can read more information on the Google and Microsoft projects, which are expected to wrap up around the end of 2025 and 2026, respectively.
For more information on the rise in data center and semiconductor-related spending, see June 27, 2024, article - IIR Webinar: Rapid Growth in Data Center & Semiconductor Sectors Brings Strong Spending, New Challenges.
Subscribers to the GMI Database can click here for a look at all of the projects discussed in this article and here for the plant profiles.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
The ISM's Purchasing Manager's Index (PMI), which tracks 18 industry sectors in the U.S., registered 46.5% in October, down from 47.2% in September and the readings in every month of the year up to that point (for example, 46.8% in July, 48.7% in May, 49.2% in April and 50.3% in March); March's reading indicated the first expansion for U.S. manufacturing activity since September 2022. Any reading under 50% indicates contraction in the manufacturing economy.
In a related summary of findings, Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee, said, "Demand remains subdued, as companies continue to show an unwillingness to invest in capital and inventory due to concerns (for example, inflation resurgence) about federal monetary policy direction in light of the fiscal policies proposed by both major parties. Production execution eased in October, consistent with demand sluggishness."
He said the drop in demand was evident in the New Orders Index's continued contraction; moderate contraction for the New Export Orders Index; and the Backlog of Orders Index "dropping further into strong contraction territory."
That sentiment was reflected in comments from respondents in the PMI's respective manufacturing industries. One from Transportation Equipment said, "Market demand has significantly decreased in the second half of 2024 and is expected to be soft through the first quarter of 2025. Although inflation has stabilized and returned to historical levels, and interest rates are decreasing, there appears to be a general pessimism in the economy that is driving customers to be more restrictive in their capital expenditures ... Uncertainty in the outcome of the upcoming election has resulted in several risk analysis studies to be prepared, particularly focused on the future of the electric vehicle (EV) migration and trade restrictions/penalties."
Another from Fabricated Metal Products said, "business levels remain depressed. It feels like a 'wait and see' environment regarding where the economy is heading; customers don't want to commit to inventory, which is resulting in lower order levels."
Despite any headwinds affecting U.S. manufacturing activity and related capital investments, Industrial Info is tracking more than $400 billion worth of U.S. Industrial Manufacturing Industry projects under construction, about one-third of which is attributed to the production of semiconductors. Subscribers to the Industrial Manufacturing GMI Database can click here for a full list of projects.
Among the semiconductor-manufacturing projects is Robert Bosch GmbH's (Gerlingen, Germany) $1.5 billion modernization of its plant in Roseville, California. The plant produces and tests 200-millimeter silicon carbide semiconductor wafer chips--a key building block for EVs. The project entails modernizing the existing manufacturing buildings, performing retooling and equipment modifications and upgrading existing production lines, among other work. Robert Bosch expects first production in 2026. Subscribers can click here to read the project report.
Two other manufacturing sectors with a high investment value are automotive and data centers. Activity in the automotive sector is buoyed by EV production and related batteries and other components. Related projects include Envision AESC's (Japan) buildout of a multi-phase EV battery-manufacturing gigafactory in Florence, South Carolina, which is designed to produce at least 30 gigawatt-hours (GWh) worth of batteries annually--with first production expected in 2027. Subscribers can read more information on the grassroot and expansion projects.
Much of the data center project activity is attributed to tech giants, and a major factor driving construction is the rise of artificial intelligence (AI). Google, through its parent company Alphabet Incorporated (NASDAQ:GOOGL) (Mountain View, California), is expanding a data center campus in Council Bluffs, Iowa, by adding a new 288,530-square-foot building. Meanwhile, Microsoft Corporation (NASDAQ:MSFT) (Redmond, Washington) is building the first two data center buildings (MKE 03 and 04) at its planned campus in Mount Pleasant, Wisconsin. Subscribers can read more information on the Google and Microsoft projects, which are expected to wrap up around the end of 2025 and 2026, respectively.
For more information on the rise in data center and semiconductor-related spending, see June 27, 2024, article - IIR Webinar: Rapid Growth in Data Center & Semiconductor Sectors Brings Strong Spending, New Challenges.
Subscribers to the GMI Database can click here for a look at all of the projects discussed in this article and here for the plant profiles.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
