The nonmetallic mineral products industry leading index increased 2.2 percent to 252.7 in November from a revised 247.3 in October, and its six-month smoothed growth rate increased to 7.9 percent from a downwardly revised 4.1 percent in October.
The six-month smoothed growth rate is a compound annual rate that measures the near-term trend. A growth rate above +1.0 percent is usually a signal of future growth in industry activity, while a growth rate below -1.0 percent points to a decrease in activity.
The rise in the leading index growth rate indicates that activity is likely to continue to increase in the nonmetallic mineral products industry. The latest data show that total construction spending is at its highest level since before the last recession.
Nonresidential construction spending, which accounts for two-thirds of all construction spending, is more than 11 percent higher year-to-date than last year. Rising employment, higher wages, and low interest rates, are promoting residential construction activity.
Nonmetallic mineral products demand from residential construction activity is likely to increase further, as new home sales increased over 10 percent in October and new home inventories are still below a balanced housing market level.
Meanwhile, another consumer of nonmetallic mineral products, oil and gas well services, is not likely to generate additional demand because of the global oversupply of oil.
All four leading index indicators increased in November. The increase in the index of new housing permits issued contributed 0.9 percentage point to the overall gain in the leading index. This is the second highest level (June was higher) that the new housing permits index has reached in eight years.
The increase in the volatile multi-unit apartment building permits segment had the most positive effect on the total housing permits index. The S&P stock price index for building products companies increased for the second consecutive month in November and contributed 0.7 percentage point to the leading index.
A longer average workweek in nonmetallic mineral products facilities contributed 0.2 percentage point. Employment in the nonmetallic minerals products industry is the highest that it has been since May 2009.