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Researched by Industrial Info Resources (Sugar Land, Texas)--Manufacturing activity in the U.S. contracted for the third straight month, according to the Institute for Supply Management's (ISM) latest Report on Business. The survey report said the ISM's January Purchasing Manager's Index (PMI), which tracks 18 industry sectors in the U.S, registered 47.4%--a decrease of 1 percentage point from December. Despite this, Industrial Info's project data shows U.S. manufacturing project activity remains robust.
The report, released February 2, said the PMI is the lowest figure since May 2020.
The New Orders index contracted "strongly," said Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee, in a press release. He added the Production index "logged a second month in contraction territory." He said out of the six biggest manufacturing industries the survey tracks, only one--Transportation Equipment--registered growth in January.
The survey respondents offered a mixed outlook for their respective activities in the short term, often depending on the PMI's respective manufacturing industries: One from Consumer & Electronic Products said: "Business is still strong, but we have begun to see softening in some pricing, and lead times seem to be improving," while another from Chemical Products noted: "Conditions are reasonable. Sales are a little better than planned. Cost pressures are easing for most products. There have been a lot fewer supply disruptions so far this year, and few expected in the short term. The crystal ball remains a little blurry for the rest of 2023."
But two other respondents, in the Fabricated Metal Products and Primary Metals industries, respectively, painted a more dire picture: "Thus far, the outlook for the first half of 2023 looks very soft. Demand for our products has taken a sharp downward turn. Our inventories are high, as well as our customers'. It seems everyone is bracing for a recession," with another adding, "In the past two weeks, we are seeing a slowing of new orders."
Another warning signal comes from a recent survey from the National Association of Manufacturers (NAM), released in early January, in which respondents said they anticipate an increase of 2.3% in capital spending over the next 12 months, lower than the second-quarter reading of 2.6% and 3.8% in the first quarter.
However, Fiore noted the PMI survey respondents are looking toward 2023 with some positivity: "With Business Survey Committee panelists reporting softening new order rates over the previous nine months, the January composite index reading reflects companies slowing outputs to better match demand in the first half of 2023 and prepare for growth in the second half of the year."
"New order rates remain depressed due to buyer and supplier disagreements regarding price levels and delivery lead times; these should be resolved by the second quarter."
Despite any red flags, however, Industrial Info's North American Construction Starts Index shows project activity in the U.S. Industrial Manufacturing Industry is on an upswing. The monthly index for December 2022, which accounts for the latest data, indicated 3,375 construction starts, with a project value of $171.6 billion--up from 2,563 starts in November; December 2021 saw 3,235 construction starts worth $72.9 billion.
Industrial Info is tracking about $300 billion worth of U.S. Manufacturing Industry projects that are under construction. Subscribers to Industrial Info's Global Market Intelligence (GMI) Industrial Manufacturing Project Database can click here for a full list.
Two industry sectors account for more than half of the planned spend: semiconductors and computers ($106.8 billion) and transportation systems ($92.7 billion).
Companies in the U.S. have projects underway to ease the semiconductor shortage and boost onshore production, and Industrial Info is tracking three major efforts from Intel Corporation (NASDAQ:INTC) (Santa Clara, California), worth a combined $50 billion: the construction of two new computer-processor and semiconductor fabs at its campus in New Albany, Ohio, and an expansion of its fab in Chandler, Arizona, which will add two additional facilities to the existing four, in order to meet growing demand. Subscribers can click here to see the related project reports.
Meanwhile, the transportation systems sector is headlined by a $25 billion grassroot rail segment project in the San Francisco area. The project, named CP1, entails constructing 32 miles of rail from Madera County to Fresno County as the initial operating section of the state's $38 billion high-speed rail project. Construction on this section kicked off in 2014 and is expected to be completed in 2026. Click here for the detailed project report.
Subscribers to the GMI project and plant databases 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 report, released February 2, said the PMI is the lowest figure since May 2020.
The New Orders index contracted "strongly," said Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee, in a press release. He added the Production index "logged a second month in contraction territory." He said out of the six biggest manufacturing industries the survey tracks, only one--Transportation Equipment--registered growth in January.
The survey respondents offered a mixed outlook for their respective activities in the short term, often depending on the PMI's respective manufacturing industries: One from Consumer & Electronic Products said: "Business is still strong, but we have begun to see softening in some pricing, and lead times seem to be improving," while another from Chemical Products noted: "Conditions are reasonable. Sales are a little better than planned. Cost pressures are easing for most products. There have been a lot fewer supply disruptions so far this year, and few expected in the short term. The crystal ball remains a little blurry for the rest of 2023."
But two other respondents, in the Fabricated Metal Products and Primary Metals industries, respectively, painted a more dire picture: "Thus far, the outlook for the first half of 2023 looks very soft. Demand for our products has taken a sharp downward turn. Our inventories are high, as well as our customers'. It seems everyone is bracing for a recession," with another adding, "In the past two weeks, we are seeing a slowing of new orders."
Another warning signal comes from a recent survey from the National Association of Manufacturers (NAM), released in early January, in which respondents said they anticipate an increase of 2.3% in capital spending over the next 12 months, lower than the second-quarter reading of 2.6% and 3.8% in the first quarter.
However, Fiore noted the PMI survey respondents are looking toward 2023 with some positivity: "With Business Survey Committee panelists reporting softening new order rates over the previous nine months, the January composite index reading reflects companies slowing outputs to better match demand in the first half of 2023 and prepare for growth in the second half of the year."
"New order rates remain depressed due to buyer and supplier disagreements regarding price levels and delivery lead times; these should be resolved by the second quarter."
Despite any red flags, however, Industrial Info's North American Construction Starts Index shows project activity in the U.S. Industrial Manufacturing Industry is on an upswing. The monthly index for December 2022, which accounts for the latest data, indicated 3,375 construction starts, with a project value of $171.6 billion--up from 2,563 starts in November; December 2021 saw 3,235 construction starts worth $72.9 billion.
Industrial Info is tracking about $300 billion worth of U.S. Manufacturing Industry projects that are under construction. Subscribers to Industrial Info's Global Market Intelligence (GMI) Industrial Manufacturing Project Database can click here for a full list.
Two industry sectors account for more than half of the planned spend: semiconductors and computers ($106.8 billion) and transportation systems ($92.7 billion).
Companies in the U.S. have projects underway to ease the semiconductor shortage and boost onshore production, and Industrial Info is tracking three major efforts from Intel Corporation (NASDAQ:INTC) (Santa Clara, California), worth a combined $50 billion: the construction of two new computer-processor and semiconductor fabs at its campus in New Albany, Ohio, and an expansion of its fab in Chandler, Arizona, which will add two additional facilities to the existing four, in order to meet growing demand. Subscribers can click here to see the related project reports.
Meanwhile, the transportation systems sector is headlined by a $25 billion grassroot rail segment project in the San Francisco area. The project, named CP1, entails constructing 32 miles of rail from Madera County to Fresno County as the initial operating section of the state's $38 billion high-speed rail project. Construction on this section kicked off in 2014 and is expected to be completed in 2026. Click here for the detailed project report.
Subscribers to the GMI project and plant databases 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).
