Weekly Industry Crib Sheet: Smart-Grid Investment to Climb

Plus: Factory Orders Rise and Unemployment Rate Drops.

Factory Orders Rise in February

New orders to U.S. factories climbed in February for the third month in the last four, suggesting manufacturing held on to some momentum early in the year, according to the U.S. Department of Commerce last week. Bookings for manufactured goods rose 1.3 percent to $468.41 billion after a revised 1.1 percent decline in January.

Economists surveyed by MarketWatch had expected orders to climb 1.5 percent.

“Businesses ordered more machinery and equipment from U.S. factories in February, a signal that many are investing in their companies despite the expiration of a tax credit,” the Associated Press reports. “U.S. factory orders have been steadily rising since the recession ended nearly three years [ago]. Orders totaled $468.4 billion in February, just 3.4 percent below the previous peak hit in 2008.”

In February, bookings for durable goods increased 2.4 percent and orders for non-durable goods rose 0.4 percent.

“Demand for new vehicles and business investment are sustaining production gains at American factories, which account for about 12 percent of the world’s largest economy,” Bloomberg News explains.

Transportation equipment had the largest increase, rising 3.9 percent in February, while demand in the volatile commercial aircraft category jumped 6 percent. Orders for automobiles and auto parts edged up 0.2 percent.

Excluding aircraft, new orders for core capital goods — a gauge of future business investment — climbed 1.7 percent in February after a 3.4 percent drop in January.

Unemployment Rate Falls, but Job Creation Slows

The U.S. labor market added 120,000 non-farm jobs in March, driving the national unemployment rate down from 8.3 percent to 8.2 percent, marking the lowest level since January 2009, according to the U.S. Department of Labor on Friday. Although national unemployment continued to fall in March, job creation slowed considerably, representing the first time since November that monthly job growth fell below 200,000.

“Some analysts called the slowdown in hiring the result of an unusually warm winter that caused seasonal work, such as outdoor construction, to continue apace instead of slowing,” the Washington Post explains. “Others, including Federal Reserve Chairman Ben S. Bernanke, worried that the sharp decline in joblessness — the unemployment rate has dropped from a recent high of 9.1 percent in August — was not supported by underlying economic growth. The decline has been ‘somewhat out of sync’ with the rather modest pace of economic growth, Bernanke said this month.”

The largest employment gains last month were in manufacturing, which added 37,000 jobs, and in food and drink services, which also grew by 37,000 jobs. Professional and business services employment rose by 31,000 and health care added 26,000 jobs. Retail trade employment fell by 34,000 jobs, and construction, mining and transportation were relatively unchanged.

March’s job figures came in well below expectations, with economists polled by MarketWatch forecasting an increase of 210,000 new jobs for the month. Experts believe that even at a pace of over 200,000 jobs per month, the U.S. would not return to full employment for at least another five years.

“This month, the decline in the jobless rate wasn’t a positive sign, as it primarily came from people dropping out of the labor force,” the Wall Street Journal’s Real-Time Economics blog notes. “When people leave the labor force it could be due to discouragement of the long-term unemployed or by choice over retirement or child care. The labor force has dropped dramatically over the course of recession and recovery, and concerns have been raised it was due to discouraged workers.”

Meanwhile, weekly initial jobless claims totaled 357,000 for the week ending March 31, down 6,000 from the previous week’s total, according to a separate report from the Labor Department. The four-week moving average, which smoothes out week-to-week volatility, fell to 361,750, a decrease of 4,250 from the previous week.

Smart-Grid Spending to Grow Through 2015

Investments in smart-grid technology and infrastructure are expected to post strong worldwide growth over the next few years, with particularly significant gains in North American and Asian markets, new research shows.

Smart-grid spending is projected to increase 17.4 percent globally through 2015 – based on the compound annual growth rate (CAGR) for hardware, software and services – according to a recent study from energy industry consulting firm IDC Energy Insights. Overall spending is expected to climb to nearly $46.4 billion worldwide in 2015, with the largest gains in the Asia-Pacific region, which is expected to see a five-year CAGR of 33.7 percent.

“Utilities across the globe share the same or similar pressures and business drivers to make ICT (information and communications technology) investments in smart grid infrastructure,” according to an announcement of the findings. “However, differences in regional investment profiles are stark in some cases, driven by differences in government mandates, environmental regulations and private sector support.”

North America is forecast to benefit from major investments in advanced metering infrastructure and smart meters, leading to high expectations for demand response in 2014. Meanwhile, North American distribution automation investments will focus on feeder automation, volt/var optimization and automated fault restoration. China will lead the Asia-Pacific region in smart meter infrastructure due its goal of deploying 300 million smart meters by 2020.

“In the coming years, power grids face a number of challenges as their operators look to integrate intermittent energy from wind turbines and solar array,” the Boston Globe reports. “Another challenge: How to capture and store energy when supply exceeds demand and then release that stored energy when it is needed. Addressing those challenges will drive significant investments.”



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