Last updateFri, 15 Dec 2017 3pm


Manufacturing Technology Orders Continue "Upward Trend"

Manufacturing technology orders in September continued their upward trend, ending the third quarter on a strong note. According to the latest U.S. Manufacturing Technology Orders (USMTO) Report, bookings for September 2017 were up 6% from August and posted a year-to-date figure 5% higher than the first nine months of 2016. The monthly total of $403 million fell short of September 2016 by 26%, a typical drop-off in odd-numbered years when IMTS, the largest manufacturing technology show in the Americas, does not occur. 

Texas Economy Resilient to Storm Effects

Texas lost fewer jobs than expected in September as a result of Hurricane Harvey, and post-hurricane data from the Texas Business Outlook Surveys point toward a rapid recovery from the storm. The 2017 Texas job growth forecast remained at 2.6% after adjusting the model input data for the temporary impact of the storm.

There are cyclical and structural headwinds to the Texas economic outlook. Labor markets have grown significantly tighter this year; the September Texas unemployment rate was 4%, having fallen 1% since April and is currently at a level last observed in December 2000. There is some slack remaining in Houston, but not much, which could hamper hurricane recovery efforts. Given Texas is highly dependent on trade with Mexico, uncertainty around ongoing trade negotiations is another headwind. 

Do U.S. Manufacturers Have Their “Mojo” Back?

Bloomberg reports that the government’s latest jobs report showed factories have taken on 74,000 workers in the past three months, with manufacturing payrolls approaching 12.5 million — the highest since January 2009.

While recovery efforts from hurricanes Harvey and Irma are helping propel business activity, sturdy domestic sales and improving international demand means that orders have piled up and caused backlogs to mount, a reliable signal that a boost in production will drive the economy. 

Dodge Momentum Index Recovers in October

The Dodge Momentum Index rose in October, climbing 13.2% to 130.9 (2000=100) from the revised September reading of 115.6. The index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. The move higher in October nearly reversed the erosion of the past four months (including September’s 7.9% decline), with October posting healthy gains in both sectors. From September to October the commercial portion of the index advanced 16.8%, while the institutional portion grew 8.3%. 

New Construction Starts in 2018 to Increase 3%

Dodge Data & Analytics predicts that total U.S. construction starts for 2018 will climb 3% to $765 billion. Commercial building will increase 2%, following a 3% gain in 2017, and continuing to decelerate after the sharp 21% hike back in 2016.

Manufacturing plant construction will recede 1% in dollar terms, after surging 27% this year due to the start of several massive petrochemical projects. Next year should still see moderate growth for manufacturing plants in square footage terms. 

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