North American Industrial Project Spending Index Jumps to 13.73 Percent in November
After dipping to its lowest point in nearly three years in October, the North American Industrial Project Spending Index, measuring project spending growth, rose to 13.73 percent in November 2008. In October 2008, the project spending index dropped for the seventh consecutive month to 1.17 percent; however, the market is showing some resilience amongst growing reports of project deferrals due to economic conditions.
According to research by Industrial Info Resources (Sugar Land, TX), all but three industries are trending up for the year, led by Oil & Gas Production with 167 percent growth, Metals & Minerals with 81 percent growth, Chemical Processing with 59 percent growth, and Oil & Gas Terminals with 28 percent growth. The three declining industries are Pulp, Paper & Wood, down 25 percent; Industrial Manufacturing, down 24 percent; and Alternative Fuels, down 12 percent.
Within the Industrial Manufacturing Industry, the automotive sector's ills are a main factor in the decline in capital spending growth within this industry. Demand for autos is down. The Big-Three automakers are scaling back production and closing plants, as they await a government bailout. In the Alternative Fuels Industry, development of new ethanol and biodiesel plants has slowed to a standstill because of low fuel prices and a glut of new capacity coming online from the build-out of the past three years.
The North American Project Spending Index is a monthly indicator comparing the total investment value of the current year to the previous year based on actual project construction starts, in order to get a measure of growth or contraction in the industrial market. The index takes into consideration project-spending activity in 12 vertical industries: Power; Terminals; Oil & Gas Transmission; Oil & Gas Production; Alternative Fuels; Petroleum Refining; Chemical Processing; Metals & Minerals; Pulp, Paper, & Wood; Food & Beverage; Industrial Manufacturing; and Pharmaceutical & Biotech.
