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Nonmetallic Mineral Products Index Increases in May


The nonmetallic mineral products industry leading index increased 1.1 percent to 243.6 in May from a revised 240.9 in April, and its six-month smoothed growth rate rose to 2.6 percent from a revised 0.7 percent in April. The six-month smoothed growth rate is a compound annual rate that measures the near-term trend, according to the U.S. Geological Survey.

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.1 This is the second consecutive increase in the nonmetallic mineral products industry leading index and its growth rate remained in positive territory.

The recovery in the nonmetallic mineral products industry is likely to progress at a slow pace in the near term. Nonresidential construction spending, which accounts for two-thirds of all construction spending, has increased since the start of the year. However,
industrial minerals consumption from unconventional oil and gas development and maintenance could slow because of relatively high crude oil inventories.

In contrast, nonmetallic minerals consumption from residential construction activity is positioned to accelerate sharply in the months directly ahead. The index of
new housing permits issued has risen to pre-recession levels the last two months. The six-month smoothed growth rate is a compound annual rate based on the ratio of the current month’s index to its average level during the preceding 12 months.

Three of the four leading index indicators increased in May, and one declined. A second increase in the index of new housing permits issued made the largest positive contribution, 1.0 percentage point, to the net gain in the leading index. Permits
for single-family home building are nearly 10 percent higher than in May 2014 and permits for multi-family apartment buildings construction are more than 50 percent percent higher.

A wider yield spread between the U.S. 10-year Treasury Note and the Federal Reserve’s federal funds rate contributed 0.3 percentage point. The S&P stock price index for building products companies, which has been rising since the start of the
year, contributed 0.2 percentage point. In contrast, a shorter average workweek in nonmetallic mineral products establishments contributed -0.5 percentage point.

However, employment in nonmetallic mineral product facilities is at its
highest level since May 2009. The coincident index, which measures current industry activity, increased 0.9 percent to 140.4 in May from a revised 139.2 in April. Its 6-month smoothed growth rate increased to 2.5 percent in May from a downwardly revised 1.5 percent in April.