U.S. Industrial Manufacturing Project Spending Stays Strong

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Researched by Industrial Info Resources (Sugar Land, Texas)--Project spending by North America's Industrial Manufacturing sectors has maintained an upward trajectory this year, largely propelled by economic recovery in the U.S.

Industrial Info's North American Industrial Project Spending Index shows that Industrial Manufacturing project activity increased for the 11th consecutive month this year, amounting to nearly $118 billion in November, up more than 58% over spending in November 2020. The Project Spending Index is a monthly indicator that compares the current active spending rates with 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 period.

Click on the image at right for a graph comparing November 2021 and November 2020 project spending in each North American market region.

The Industrial Manufacturing Industry spans a wide range of sectors, including automotive, data centers, distribution & warehousing, semiconductors & computers, and transportation systems, among others. Industrial Info is tracking more than 3,500 active capital spending projects within the U.S. industry, valued at $516 billion, including more than 1,100, worth $205 billion, that are in the construction stage. Subscribers to Industrial Info's Global Market Intelligence (GMI) Industrial Manufacturing Project Database can click here for a list of detailed construction-stage project reports.

The outlook for capital spending by U.S. manufacturers in 2022 is positive, although perhaps at a more moderate pace than what was seen in 2021. According to the Institute of Supply Management's (ISM) Semiannual Economic Forecast, released on Monday, capital spending among 15 out of the 18 manufacturing sectors tracked by the ISM is expected to increase 7.7% in 2022, compared with a 12.1% increase in 2021.

Of the purchasing and supply executives who participated in the forecast and expected capital expenditures to increase next year, 40% predicted an average increase of 27.1%, according to the ISM. Manufacturers of electrical equipment, appliances & components and apparel were among those who predicted increases in capital expenditures at or above the average increase of 7.7%.

According to the U.S. Federal Reserve System's November Beige Book on current economic conditions, economic activity grew at a modest to moderate pace in most Federal Reserve districts during October and early November. "Several districts noted that despite strong demand, growth was constrained by supply-chain disruptions and labor shortages," according to the Beige Book, which added that manufacturing growth "was solid across districts, though materials and labor shortages limited expansion (and) high freight volumes continued to strain distribution systems."

One of the big-ticket projects under construction within the semiconductors & computers sector is Taiwan Semiconductor Manufacturing Company Limited's (NYSE:TSM) (Hsinchu, Taiwan) $12 billion advanced chip manufacturing plant in Phoenix, Arizona. The project is the first phase of a planned $35 billion investment, with a 3.8 million-square-foot manufacturing campus and an initial production capacity of 20,000 12-inch semiconductor wafer starts per month and equipment to manufacture 5-nanometer semiconductors. Construction kicked off in mid-2021, with expectations to complete the project by mid-2024. Subscribers can click here for more information.

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.