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US Manufacturing Faring Better Than Expected

New reports suggest the US manufacturing sector is showing more resilience than anticipated.

By John McCloud | Updated on June 12, 2008

WASHINGTON, DC-Though signs of trouble have not disappeared, new reports suggest the US manufacturing sector is showing more resilience than anticipated. Not only was the drop in durable goods orders for April barely a third of what was predicted, but grassroot industrial plant construction continues to experience explosive growth.

The Commerce Department reports that orders for durable goods dropped 0.5% in April. But when transportation industries are removed from the picture, orders actually rose 2.5%, the biggest gain in nine months. Moreover, orders for electrical equipment and appliances surged 27.8%, the biggest jump on record. Demand for machinery, primary metals and communications equipment also increased, by 4.2%, 2.8% and 2.2%, respectively. Had it not been for a 24.4% plunge in commercial aircraft orders and very small decrease in automobile orders, the results would have been positive.

Thus, it’s less surprising to learn that construction of grassroots manufacturing plants is proceeding at an even more rapid clip than in 2007, which itself marked a banner year. Grassroots refers to plants being constructed from the ground up with no previous site improvements. According to the most recent research from Industrial Info Resources of Sugar Land, TX, in Q1 there were 881 grassroot plants with a total value of $129 billion under construction in the US. This compares to 656 such plants valued at $88 billion for the same period a year ago and 601 plants valued at just over $60 billion in ’06.

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