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Released January 10, 2024 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--U.S. manufacturers reported another drop in expected capital expenditures, based on the latest outlook survey by the National Association of Manufacturers (NAM), although Industrial Info is tracking $54 billion worth of capital Industrial Manufacturing Industry projects planned to kick off through March.
The NAM survey ran from November 14 to December 1 and received 234 responses, featuring small (those with 49 or less employees), medium-sized (between 50 and 499 employees) and large manufacturers (500 or more employees).
According to the survey results, released January 8, respondents to the survey anticipate an increase of 0.6% in capital spending over the next 12 months, half of the 1.2% registered in the third quarter--marking the lowest rate since second-quarter 2020.
Nearly 36% of respondents expect additional capital spending in the next year, with 39.3% predicting no change and 24.8% forecasting reduced capital expenditures, the latter of which is up from the 17.8% reported last quarter.
In terms of overall sentiment, 66.2%% of respondents were positive about their own company's outlook, up slightly from 65.1% in the third quarter, although that reading is not far from a post-pandemic low.
According to the summary of findings, more than 71% of manufacturers cited the inability to attract and retain employees as their top primary challenge, followed by a weaker domestic economy (63.7%), rising healthcare costs (61.1%), an unfavorable business climate (61.1%) and healthcare and insurance costs (59.8%). Concern about an unfavorable business climate was the highest in seven years.
That negative sentiment is reflected in Industrial Info's North American Industrial Project Spending Index, which shows project spending in the U.S. Industrial Manufacturing Industry in November 2023 (the latest data available) continued into negative territory for the third month in a row on a year-over-year basis.
However, the latest NAM outlook survey showed some positive signs. For example, fewer respondents expect a recession in 2024 than they did three months earlier (34%, down from 56.8% and 42.2% in the second and third quarters, respectively.)
The downtrend in manufacturers' capital-spending expectations is in line with the Institute of Supply Management's (ISM) latest Purchasing Managers Index (PMI), which follows 18 manufacturing industry sectors; it showed economic activity in the manufacturing industry remains in contraction territory. Although the PMI grew slightly in December, the reading marked the third consecutive month of contraction "after one month of weak expansion preceded by nine months of contraction and a 30-month period of expansion before that," said Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee.
Of the 18 industry sectors followed by the ISM, none of the six biggest manufacturing sectors registered growth in December.
Still, Industrial Info is tracking $54 billion worth of capital Industrial Manufacturing Industry projects in the U.S. planned to kick off in the first quarter. By sector, data center projects account for roughly 30% of the activity, with more than $16 billion in investment, followed by the automotive sector ($9.6 billion), transportation systems ($8 billion, wrapped up mostly in one project), heavy manufacturing ($7 billion) and semiconductors & computers ($3.8 billion).
Subscribers to Industrial Info's Global Market Intelligence (GMI) Industrial Manufacturing Project Database can click here for a full list of project reports.
The data center projects include construction of Skybox Datacenters' (Dallas, Texas) $720 million first phase of its grassroot data center campus in Hutto, outside of Austin. The first phase involves constructing a 469,000-square-foot building with 12 data halls at the planned six-building campus, also known as PowerCampus Austin. The project is expected to kick off in March, with completion in mid-2025. Subscribers can click here for the project report.
Project activity in the automotive sector is buoyed by a rise in the development of electric vehicles (EVs) and related battery systems, and Industrial Info is tracking a $200 million expansion of Hyundai Motor Group's (Seoul) 340,000-unit-per-year automobile assembly plant in West Point, Georgia. The project entails transforming an existing production line and installing supporting equipment and systems to accommodate assembly of the Kia brand's fully electric SUV model, EV9. Construction is expected to wrap up at the end of the year. Click here to read more information.
For more information on data center, automotive, heavy manufacturing and semiconductor & computer projects planned to kick off through March, see January 2, 2024, article - U.S. Data Centers to See Up to $19 Billion in First-Quarter Kickoffs, December 18, 2023, article - U.S. Automakers Look to $14 Billion in First-Quarter Kickoffs, December 6, 2023, article - U.S. Heavy Manufacturing Caters to Battery, Automated System Needs and January 4, 2024, article - Solar Demand Drives U.S. Semiconductor & Computer Segment Growth.
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 NAM survey ran from November 14 to December 1 and received 234 responses, featuring small (those with 49 or less employees), medium-sized (between 50 and 499 employees) and large manufacturers (500 or more employees).
According to the survey results, released January 8, respondents to the survey anticipate an increase of 0.6% in capital spending over the next 12 months, half of the 1.2% registered in the third quarter--marking the lowest rate since second-quarter 2020.
Nearly 36% of respondents expect additional capital spending in the next year, with 39.3% predicting no change and 24.8% forecasting reduced capital expenditures, the latter of which is up from the 17.8% reported last quarter.
In terms of overall sentiment, 66.2%% of respondents were positive about their own company's outlook, up slightly from 65.1% in the third quarter, although that reading is not far from a post-pandemic low.
According to the summary of findings, more than 71% of manufacturers cited the inability to attract and retain employees as their top primary challenge, followed by a weaker domestic economy (63.7%), rising healthcare costs (61.1%), an unfavorable business climate (61.1%) and healthcare and insurance costs (59.8%). Concern about an unfavorable business climate was the highest in seven years.
That negative sentiment is reflected in Industrial Info's North American Industrial Project Spending Index, which shows project spending in the U.S. Industrial Manufacturing Industry in November 2023 (the latest data available) continued into negative territory for the third month in a row on a year-over-year basis.
However, the latest NAM outlook survey showed some positive signs. For example, fewer respondents expect a recession in 2024 than they did three months earlier (34%, down from 56.8% and 42.2% in the second and third quarters, respectively.)
The downtrend in manufacturers' capital-spending expectations is in line with the Institute of Supply Management's (ISM) latest Purchasing Managers Index (PMI), which follows 18 manufacturing industry sectors; it showed economic activity in the manufacturing industry remains in contraction territory. Although the PMI grew slightly in December, the reading marked the third consecutive month of contraction "after one month of weak expansion preceded by nine months of contraction and a 30-month period of expansion before that," said Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee.
Of the 18 industry sectors followed by the ISM, none of the six biggest manufacturing sectors registered growth in December.
Still, Industrial Info is tracking $54 billion worth of capital Industrial Manufacturing Industry projects in the U.S. planned to kick off in the first quarter. By sector, data center projects account for roughly 30% of the activity, with more than $16 billion in investment, followed by the automotive sector ($9.6 billion), transportation systems ($8 billion, wrapped up mostly in one project), heavy manufacturing ($7 billion) and semiconductors & computers ($3.8 billion).
Subscribers to Industrial Info's Global Market Intelligence (GMI) Industrial Manufacturing Project Database can click here for a full list of project reports.
The data center projects include construction of Skybox Datacenters' (Dallas, Texas) $720 million first phase of its grassroot data center campus in Hutto, outside of Austin. The first phase involves constructing a 469,000-square-foot building with 12 data halls at the planned six-building campus, also known as PowerCampus Austin. The project is expected to kick off in March, with completion in mid-2025. Subscribers can click here for the project report.
Project activity in the automotive sector is buoyed by a rise in the development of electric vehicles (EVs) and related battery systems, and Industrial Info is tracking a $200 million expansion of Hyundai Motor Group's (Seoul) 340,000-unit-per-year automobile assembly plant in West Point, Georgia. The project entails transforming an existing production line and installing supporting equipment and systems to accommodate assembly of the Kia brand's fully electric SUV model, EV9. Construction is expected to wrap up at the end of the year. Click here to read more information.
For more information on data center, automotive, heavy manufacturing and semiconductor & computer projects planned to kick off through March, see January 2, 2024, article - U.S. Data Centers to See Up to $19 Billion in First-Quarter Kickoffs, December 18, 2023, article - U.S. Automakers Look to $14 Billion in First-Quarter Kickoffs, December 6, 2023, article - U.S. Heavy Manufacturing Caters to Battery, Automated System Needs and January 4, 2024, article - Solar Demand Drives U.S. Semiconductor & Computer Segment Growth.
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).
