July 2013 Economic Indicators
Melanie Garza - Director of Operations
Residential Construction Spending Rises, Manufacturing Lags
July 2013 – The U.S. Census Bureau of the Department of Commerce announced on July 1st that seasonally adjusted construction spending during May 2013 grew 0.5% over April 2013 to $874.9 billion. Estimates show that total construction spending is up 6.2% from 2012.
Residential construction spending has risen to its highest levels since October 2008. In May, residential construction was $322.3 billion, up 22.7% from a year ago. Economists predict that as residential construction grows along with increased home sales and valuations, manufacturers of building materials should expect to see an increase in demand and growth over time.
Despite the positive residential construction spending, the manufacturing sector has yet to realize the growth from the residential boom. In May, construction spending in manufacturing dropped -8.1% and has fallen -4.3% from a year ago. Communication and amusement/recreation spending also fell in May and have seen double digit declines over the past 12 months. Meanwhile the transportation sector grew 3.7% in May and 10.6% over the last year. Other gains were seen in lodging, religious, and water supply.
Durable Goods Orders Continue to Climb
The US Census Bureau reported new orders for manufactured durable goods are climbing. New orders are up three of the last four months, climbing another 3.6% in May bringing spending to $231 billion. Excluding transportation, durable goods orders grew slightly at 0.7%.
Transportation equipment reported the largest increase of 10.2% to $74.3 billion. Over the last twelve months, transportation has grown significantly. Nondefense aircraft and parts grew 4.6%, and motor vehicles rose 10.1%. During the same period defense aircraft and parts posted a significant loss of -34.1% as attributed to cuts in federal spending.
Economists suggest that industrial investments in capital equipment and technology have led to increased orders for other industrial goods. Communication equipment orders jumped 12. 6% in May, and have grown 7.5% over the last year. Other May gains were reported with primary metals at 0.9%, machinery with 1.2%, and computers with a 2.7% gain.