Wells Fargo: Amazon Driving Warehouse Construction, BHP Cuts Iron Ore Production

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Non-residential construction starts, a good leading indicator for outlays and spending, spiked more than 40% in February according to a major bank report due, in part, to a large jump in warehouse spending and a major iron ore producer is cutting production as prices just start to recover.

Warehouse Spending Jumps

A recent economic report from Wells Fargo Securities Economics Group showed private warehouse spending for last year jumped 48.6% and is expected to rise again in 2015.

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E-commerce was cited as just one reason for the accelerated growth in warehouse spending.

Companies such as Amazon are changing almost every aspect of the supply chain as it expands its reach to a growing share of the population by placing fulfillment centers close to the consumer, the report says, noting that Amazon has about 75 fulfillment centers in the US and another 15 underway.

Wells Fargo estimates that there will be growth in institutional and commercial building; those markets have been slower than others, like manufacturing building, in 2014. The bank also predicts structure investment spending to increase 5% this year and 8% in 2016.

Iron Ore Production Slashed

BHP Billiton, the world’s largest mining company, said on Tuesday it would slash its iron ore production cost further and cut spending to better withstand a downturn in commodity prices.

Giant iron ore producer BHP and rival Rio Tinto Group are locked in a battle to become the lowest cost iron producer.

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