Leading Electrical Indicators - January 2014

Jan. 24, 2014
Building permits and manufacturing indices look strong, but architect billings continue to languish.

Building permits rise 17.5% in 2013. The U.S. Census Bureau said privately-owned housing units authorized by building permits in December were at a seasonally adjusted annual rate of 986,000, 3% below the revised November rate of 1,017,000, but 4.6% above the December 2012 estimate of 943,000. Single-family authorizations in December were at a rate of 610,000; 4.8% below the revised November figure of 641,000. An estimated 974,700 housing units were authorized by building permits in 2013, 17.5% above the 2012 figure of 829,700.

AIA’s Architecture Billings Index ends 2013 with a whimper. Following consistently increasing demand for design services throughout most of 2013, the Architecture Billings Index (ABI) has posted its first consecutive months of contraction since May and June of 2012. As a leading economic indicator of construction activity, the ABI reflects the approximate nine- to twelve-month lead time between architecture billings and construction spending. The American Institute of Architects (AIA), Washington, D.C., reported the December ABI score was 48.5, down from a mark of 49.8 in November. This score reflects a decrease in design services (any score above 50 indicates an increase in billings).

“What we thought last month was an isolated dip now bears closer examination to see what is causing the slowdown in demand for architectural services,” said AIA chief economist Kermit Baker. “It is possible that some of this can be attributed to the anxiety in the marketplace caused by the shutdown of the federal government, but it will be important to see how business conditions fare through the first quarter of the new year when we no longer have end of the year issues to deal with.”

Purchasing managers like what they see for 2014. The Purchasing Managers Index published monthly by the Tempe, Ariz.-based Institute for Supply Management (ISM) finished 2013 at a strong 57%, the second highest reading for the year, and just 0.3 percentage point below November’s reading of 57.3%. The New Orders Index increased in December by 0.6 percentage point to 64.2%, its highest reading since April 2010 when it registered 65.1%.