North American Industrial Project Spending Index Remains Up in November Amid Signs of Slowing Economic Growth

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Researched by Industrial Info Resources (Sugar Land, Texas)--Amid signs of a slowdown in economic growth, Industrial Info's North American Industrial Project Spending Index, which measures the value of active projects in the pipeline for the year, registered an 11.31% year-on-year gain in November. However, the growth rate was less than half of what was recorded a year earlier.

The Project Spending Index is a monthly indicator that compares planned industrial project spending for the current year to the previous year, in order to get a measure of growth or contraction in the industrial market. The index provides spending details by industry and market region, including monthly updates that measure the rate of activity from this year to last year during the same month.

Click on the image at right for a graph showing the North American Industrial Project Index results for November by market region.

The active project value in November was $341.82 billion, up by $34.74 billion from the value in November 2018. For related information, see December 27, 2018, article - North American Industrial Project Spending Index Up 23.9% in November.

The 11.31% gain seen last month compares with an increase of 23.9% recorded for November 2018. With the exception of August, the percentage gains reported for each month this year have lagged behind those of a year earlier.

Six of the 12 industries tracked by Industrial Info registered year-on-year spending gains in November. The Power Industry registered 47.21% growth ($25.83 billion) while onshore Oil & Gas Pipelines fell 37.87% ($13.1 billion). For related information, see November 11, 2019, article - Global Electric Power Industry Investing Trillions of Dollars to Build New Assets and October 9, 2019, article - Permian Oil Production and Pipeline Capacity are Balanced, but How Long Will It Stay that Way?.

The U.S. Federal Reserve reported on Tuesday that manufacturing production rebounded 1.1% in November after declining in October. The November increases were due largely to a bounceback in the output of motor vehicles and parts following the end of a strike at General Motors plants. Mining production edged down 0.2%. For related information, see October 4, 2019, article - Industrial Info Tracks $15 Billion in U.S. Automotive Projects Under Construction Amid Flagging Third-Quarter Sales.

The Institute for Supply Management's (ISM) manufacturing Purchasing Managers Index (PMI) was 48.1% for November, down from 48.3% in October, marking the fourth straight month of contractions. A number below 50% represents a contraction in the industry.

The PMI covers 18 industries, ranging from food, beverage and tobacco products to chemical and paper products.

"Global trade remains the most significant cross-industry issue. Among the six big industry sectors, food, beverage and tobacco products remains the strongest, while fabricated metal products is the weakest. Overall, sentiment this month is neutral regarding near-term growth," Fiore said.

The ISM also said this month that it expects U.S. economic growth to continue in 2020. However, capital expenditures will drop by 2.1%, following 6.4% growth in 2019, the group said.

The American Chemistry Council's (ACC) Chemical Activity Barometer (CAB) was stable in November on a three-month moving average. On a year-on-year basis, the barometer was down 0.2%.

The ACC said that chemical production expanded at a slower pace in 2019, due to trade challenges and slower growth in several key end-use markets.

Weakness in global manufacturing and uncertainty in trade policy will further moderate U.S. chemicals output growth in 2020, according to the ACC's Year-End 2019 Chemical Industry Situation and Outlook. It added that output from new capacity linked to the U.S.' shale-gas cost advantage will continue to benefit the industry.

"Due to slowing growth prospects across much of the globe and rising trade tensions, exports of chemicals and some chemistry-containing goods fell this year," said ACC Chief Economist Kevin Swift in a press release. Total U.S. chemicals trade is projected to contract by 3% to $242 billion in 2019, then recover by 1% in 2020.

The U.S. and China recently announced a preliminary trade agreement, under which many tariffs would be eliminated or delayed. For related information, see Industrial Info's December 18, 2019, Market Scorecard.

Industrial Info's November North American Construction Starts Index, which measures the amount of project activity that has been funded and started construction this year, amounted to $295.52 billion, up 11.6% from a year earlier. Total investment values rose in six of the 12 industries tracked by Industrial Info.

The North American Spending Gap Index, which measures the amount of fallout from projects that have been cancelled, placed on hold or moved to another year, totaled $353.8 billion in November, compared with $400.1 billion a year earlier. The value of project fallouts for 2019 through November have been less than those for the same period in 2018.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.