Despite Manufacturing Construction Missteps, Sector Remains on Positive Trajectory

Durable goods orders slipped 1.8% in May after dropping 1.5% in April. Transportation equipment leads the decrease, down 0.1% in May, according to the U. S. Department of Commerce report for May 2015. Manufacturing will take another hit as the oil and gas sector slows capital spending. However, despite some difficulties in manufacturing activity — after seeing 15% growth in construction in 2014 — FMI expects another 17% increase for 2015.

The manufacturing renaissance will continue to be susceptible to future energy prices and markets here and abroad, and FMI expects double-digit growth to slow to just 8% in 2016. Newer facilities are more efficient and often replace older plants. In addition, manufacturing capital construction is highly cyclical when markets reach a state of overcapacity, as some petrochemical products are expected to do in the next few years after a spate of building activity. But while the manufacturing sector will struggle to maintain its growth trajectory, at this point, FMI thinks the trend will continue to be positive through 2019.