JRE - Construction Spending Rises
2023-11-06 15:40:00 ET
Summary
- The history of construction spending since 1993 reveals that this data tends to weaken prior to recessions.
- For a recent dip in Residential Construction attributed to the rise in mortgage rates, this indicator is charging higher.
- The COVID disruption revealed many flaws in pre-COVID supply chains, including reliability of product supply and quality control.
The history of construction spending since 1993 reveals that this data tends to weaken prior to recessions. But for a recent dip in Residential Construction attributed to the rise in mortgage rates, this indicator is charging higher. Noteworthy is Manufacturing Construction . While Total Construction has risen ~20% since September 2021, Manufacturing Construction has risen 125% over the same time frame. This matches the reshoring narrative.
The COVID disruption revealed many flaws in pre-COVID supply chains, including reliability of product supply and quality control. Without secure supply and parts manufactured to engineering specs corporations rapidly lose profitability. That Total Construction Spending remains in a strong uptrend, with exceptional strength from Manufacturing Construction , indicates continued economic expansion despite analyst’s forecasts for recession.
At some point, investors will respond to good news and price industrial issues higher.
Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.
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Construction Spending Rises