Weekly Industry Crib Sheet: China Surpasses U.S. in Clean Energy Investment
Credit: Perry A. Dominguez
Credit: Perry A. Dominguez

Plus:
Leading Economic Indicators Decline
New Program to Revitalize Manufacturing Communities
Housing Starts Hit Five-Year High
Jobless Claims Inch Up


Global investment in clean energy projects fell to $40.6 billion in the first quarter of 2013, a 22 percent decline from the first quarter of 2012, as nations cut subsidies for a wide range of technologies, including wind turbines and solar power systems, according to a recent report from Bloomberg New Energy Finance.

“The decline reflected the effects of policy uncertainty in key clean energy markets such as the U.S. and Germany, a lull in financings in some relatively buoyant markets such as China and Brazil – and also the effect on dollar investment levels of the recent, sharp declines in technology costs, particularly those of solar photovoltaic panels,” the report explains.

In the U.S., there was a 54 percent year-over-year plunge in clean energy investment, down to a total of $4.5 billion. Chinese investment fell 15 percent to $8.8 billion, but remained almost double the size of American investment. China was the world’s top destination for energy financing in 2012, while the U.S. held that position in 2011.

“Analysts attribute China’s success to its stable, long-term incentives, such as its target goal to get 20 percent of its energy from renewable sources by 2030. China’s clean-energy push is spurred partly by its mounting pollution problems,” CNN Money reports. “While some U.S. states have set their own targets, there is no federal policy on the matter. The federal approach mainly consists of a variety of tax breaks that depend on being renewed every few years.”


Leading Economic Indicators Decline

The index of U.S. leading economic indicators fell slightly in March, indicating that U.S. economic growth may be slowing down. The Conference Board’s Leading Economic Index (LEI) for the U.S. decreased 0.1 percent last month to 94.7, following gains of 0.5 percent in both February and January.

The March decline was unexpected, as economists polled by MarketWatch had forecast the LEI to rise 0.2 percent for the month. Strengths and weaknesses were equally distributed, with five of the 10 key indicators posting losses in March, and five posting gains, compared to eight improved indicators in February.

“Data for March reflect an economy that has lost some steam. In addition to headwinds from government spending cuts, the private sector economy may struggle to maintain its momentum,” Ken Goldstein, an economist for the Conference Board, noted. “The biggest challenge remains weak demand, due to nervous consumer sentiment and slow income growth.”

The LEI is a weighted gauge of indicators tracking business cycle peaks and troughs. The largest declines last month were in consumer expectations, building permits, the manufacturing new-orders index, weekly manufacturing hours, and weekly jobless claims. Positive contributions came from the leading-credit index, stock prices, manufacturers’ new orders for core capital goods, and manufacturers’ new orders for consumer goods and materials.


New Program Aims to Revitalize Manufacturing Communities

The U.S. Department of Commerce has unveiled a new initiative to help revitalize and support the manufacturing sector in cities across the country by providing coordinated, long-term investments in public goods in partnership with universities and industry.

Known as the Investing in Manufacturing Communities Partnership (IMCP), the program was designed by the White House to spur new industry development in areas that have shed factory jobs. The IMCP will offer grants of about $200,000 each to up to 25 communities to create strategic plans for future advanced manufacturing opportunities. The fund will also award five to six of these communities up to $25 million each through a competitive process in 2014.

“Under the president’s proposed budget, the Commerce Department would provide $113 million in funding support – matched with funds from local public and private sources – to co-invest in key projects that can help attract manufacturers and build supply chains,” Rebecca Blank, Deputy Secretary of Commerce, explained at a recent speech in Utah. “Projects could include a new research or tech transfer program, a major physical infrastructure improvement, or a workforce development initiative.  We’ll be looking for communities that can leverage our various resources and funding opportunities to help win that next big business investment from a manufacturer.”

The funding will be distributed based on a set of key criteria, including whether the community has taken full stock of its local assets, resources, and comparative advantages to attract the right industries, and whether new investments in infrastructure or local institutions will make the city more economically attractive.

“It’s a relatively small amount, and Blank didn’t exactly raise expectations that it will lead to millions of new factory jobs, especially because manufacturing today is far less labor-intensive than it used to be,” the Washington Post reports. “But she hopes the proposals will set off a happy chain of activity in cities that have been beset by job losses, with new factory work driving more business activity (and job creation) to support it, along with new research that could lead to new industries.”


Housing Starts Hit Five-Year High

Home-building in the U.S. continued to rebound in March, with new housing starts climbing at their fastest pace since mid-2008, adding to signs that the housing recovery is gaining momentum.

Privately owned housing starts rose to a seasonally adjusted annual rate of 1 million in March, a 7 percent increase over February and 46.7 percent above the total for March 2012, according to the U.S. Department of Commerce. The gain was partly driven by a surge in multi-family home construction, which jumped 31 percent in March to an annual rate of 417,000, the highest level since January 2006.

“A recovery in housing, driven by growing demand and record-low mortgage rates, is boosting other sectors of the economy,” Reuters notes. “Home building added to national economic growth last year for the first time since 2005 and is expected to provide support this year.”

Building permits showed more mixed results, with the number of permits issued in March totaling 902,000, a 3.9 percent decline from February but 17.3 percent above the total for March 2012. Meanwhile, the number of housing completions climbed to 800,000, an 11 percent gain over February and 36.3 percent above the same month last year.


Jobless Claims Inch Up

New initial jobless claims rose slightly in the latest week reported, following several weeks of large fluctuations, indicating that labor market conditions may be stabilizing. According to the U.S. Department of Labor, unemployment claims for the week ending April 13 edged up by 4,000 to a total of 352,000.

The four-week moving average, which smoothes volatility and provides a clearer long-term picture of the employment market, rose by 2,750 to 361,250, remaining close to its lowest level in five years.

“The report indicates employers have enough demand to hold on to workers, which means they may be prepared to boost hiring should sales pick up,” Bloomberg News reports. “Gains in consumer spending, the biggest part of the economy, will be needed to prevent growth from slowing as automatic cuts in federal spending take effect.”

Analysts also attribute the modest increase to the end of several temporary seasonal factors, including the Easter holiday and school spring breaks, which can distort the statistics. In total, roughly 3.1 million people filed for their second week or more of unemployment benefits.

 

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