Sluggish Start to New Year for U.S. Industrial Manufacturing Industry

---

Researched by Industrial Info Resources (Sugar Land, Texas)--2012 was certainly an odd year for the Industrial Manufacturing industry in the United States. The year began strong thanks to a mild winter, with companies beginning their 2012 spending earlier than expected, which led to some big months in terms of construction starts for the industry. However, later in the year, things slowed down as the presidential election approached, and once it concluded the fiscal cliff debate began to rage. Despite a partial solution to the fiscal cliff, one that will only last a few weeks, spending appears to remain sluggish within the U.S. Industrial Manufacturing Industry as an air of uncertainty remains.

Click on the image at the right for a graph detailing U.S. Industrial Manufacturing construction starts in the first quarter of 2013 by region.

Spending is certainly likely to pick up as the year evolves, but companies remain leery of the partial fix that Congress agreed to for the looming fiscal cliff. The nation's debt issue and out-of-control spending have not been addressed, and spending cuts are certainly going to play a significant role in whatever more permanent solution Washington develops in the next couple of months. This will directly affect the Industrial Manufacturing Industry, especially companies that are government contractors, and companies that supply parts to other companies that supply products to the government, particularly the U.S. Department of Defense.

Looking at planned spending for the first quarter shows an industry that is not at all confident that a solution to the dispute in Congress is near. Industrial Info is currently tracking 117 capital or maintenance projects worth an estimated $3.4 billion within the Industrial Manufacturing Industry that are scheduled to begin construction in the U.S. during the first quarter of the year. This is a significant decline over past years, even when there has been severe winter weather that has curtailed spending.

Not a single region of the country is expected to broach the $1 billion mark in first-quarter spending, with the Great Lakes region, the blue collar backbone of the country, seeing the highest potential spending in the country at $927 million. The Northeast is poised for just more than $500 million in quarterly project activity, while the Southeast and Southwest regions, both which have seen significant spending opportunities in recent quarters, join the West Coast in total projected spending of between $400 million and $500 million for the first three months of the year.

Most companies within the Industrial Manufacturing Industry continue to take a wait-and-see approach to significant spending as they await some kind of indicator from Washington as to which direction the overall economy will be heading for the balance of 2013.

There is still the potential for another recession driven by Washington D.C., provided the lawmakers cannot put aside their partisan politics and come to a permanent agreement about how to fix the spending and revenue problems facing the U.S., which has companies within the Industrial Manufacturing Industry nervous. The first quarter of 2013 will be key to the year's economic future and to how spending will shape up within the industry for the other nine months of the year. Hopefully, those in Washington can reach an agreement that will assuage these fears and uncertainties, and companies will get back to spending, which in turn will stimulate the economy and create thousands of much needed jobs this year.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, 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.