Continued strength in North American industrial project activity in November lent support to a gradually strengthening U.S. economy. According to an analysis by Industrial Info—a leading provider of global industrial market intelligence—the North American Industrial Spending Index rose 30% compared to year-earlier scheduled project spending. In fact, November marked the 12th consecutive month this index has shown double-digit increases in industrial project spending. (See chart, Year over Year Change).

Overall, the Spending Index has increased for 21 consecutive months. The index reflects companies’ planned spending for capital and maintenance projects that are scheduled to begin in a given year. During the fourth quarter, industrial concerns typically trim their project spending plans, opting to defer or cancel some projects before the end of the calendar year. That shakeout is taking place this year, as expected, and the adjustments to the Spending Index are expected to continue for the next few months. So any numbers reported during the fourth quarter, and even in early 2012, should be considered preliminary and subject to change.

Each month, Industrial Info Resources measures the value of active North American capital and maintenance projects scheduled to start construction in the current year. Then, that figure is compared to the rate of scheduled annual spending for the prior year. A positive number signals growth, while a negative number signals a contraction in industrial spending.

Through the end of November, Industrial Info was tracking 6,651 active North American capital and maintenance projects scheduled to kick off this year. These projects carry a total investment value (TIV) of $233.2 billion (see chart, North American Projecting Spending - November). By contrast, for the January-November 2010 period, Industrial Info was tracking 5,602 active projects that were scheduled to kick off that year, with a TIV of $179.5 billion.

Consistent with previous months, the U.S. regions reporting the strongest year-over-year gains in scheduled project spending remain the West Coast, Southwest, Rocky Mountains and Southeast regions. A surge in project spending took place in the Midwest and New England regions, while more modest gains were recorded in the Northeast, Mid-Atlantic and Great Lakes regions compared to 2010. Western Canada and Quebec continued to report sharp year-over-year gains in scheduled project spending. This year, project spending is scheduled to rise slightly in Atlantic Canada compared to last year, while Ontario expects to see a decline in project spending this year compared to 2010. Scheduled spending in Mexico increased slightly compared to year-earlier levels.

On a dollar basis through November, North American project spending growth this year has been strongest in these industries:

• Metals & Minerals, up $14.9 billion to $40.3 billion
• Power, up $11.8 billion to $82 billion
• Industrial Manufacturing, up $10.7 billion to $32 billion
• Oil & Gas Production, up $3.9 billion to $19 billion

On a percentage basis, North American project spending growth this year was strongest in these industries:

• Terminals, up 92%
• Metals & Minerals, up 59%
• Alternative Fuels, up 56%
• Industrial Manufacturing, up 51%
• Pulp, Paper & Wood, up 48%

The November data showed that none of the 12 North American industries tracked by Industrial Info are planning to reduce spending this year compared to 2010. Continued strong demand and high commodity prices are driving project spending plans in the Metals & Minerals and Oil & Gas Production industries, while increased consumer demand for consumer electronics and durable goods are propelling spending plans for companies in the Industrial Manufacturing industry. Spending in the Power industry continues to be driven by U.S. environmental regulation and the requirement that renewable energy projects receiving federal cash grants begin construction by year-end 2011.

For additional information, view the December 2011 issue of Industrial Info’s NAVIGATIIR online newsletter.