Manufacturing is currently the fastest-growing construction sector at 25% for 2015. However, we expect that rate to back down a bit in 2016 to 11%. Continued low energy prices will hold down capacity additions in the oil and gas sector, but help those relocating or expanding in other areas of manufacturing, including the current boom in the petrochemical areas. The completion of the Panama Canal expansion project is expected to decrease costs and increase shipments from Gulf Coast ports between the United States and Asia. Current fluctuations in the stock market and the future direction of the Chinese economy will be watched closely by those considering adding new manufacturing plants or relocating to the United States from offshore locations.
Much of the improvement in manufacturing construction is likely a matter of catching up after such a slow period prior to and since the recession, as demand has fluctuated. With little change since last quarter, manufacturing capacity utilization rates are at 76.4% of capacity in October 2015, which has been consistent for the year. The U.S. Department of Commerce reports, “Shipments of manufactured nondurable goods, up following three consecutive monthly decreases, increased less than $0.1 billion or virtually unchanged to $235.1 billion. This followed a 0.9% September decrease. Paper products, up following two consecutive monthly decreases, drove the increase, $0.2 billion or 1.2% to $16.2 billion.” The Manufacturing ISM Report on Business reports the PMI for November 2015 was at 48.6%.
