Electrical Marketing’s Leading Economic Indicators

Aug. 28, 2009
Don’t break out the bubbly just yet, but more and more of the economic news is distinctly positive

Don’t break out the bubbly just yet, but more and more of the economic news is distinctly positive. Some key leading indicators for the electrical market and the U.S. economy as a whole looked better in July.

Purchasing Managers Index nearing positive territory with 4.1-point increase in July. With the Purchasing Managers Index enjoying a 4.1-point increase in July to 48.9 points, just below the 50-point threshold indicating industry growth. Norbert Ore, chair of the Institute for Supply Management Manufacturing Business Survey Committee, said the popular indicator for industrial purchasing trends is “setting an expectation for future growth in the sector.” He also said, “Overall, it would be difficult to convince many manufacturers that we are on the brink of recovery, but the data suggests that we will see growth in the third quarter if the trends continue.”

Building permits rise for fourth consecutive month in July. Single-family permits registered a 5.8 percent gain to 458,000 units, the highest level since October 2008. While it’s still a extraordinarily low number for building permits compared to almost any time during the past decade, the trend is distinctly positive. The Midwest enjoyed a 14.1 percent month-to-month increase in building permits. Sadly, this increase in permits is still about 27.6%percent below last year’s levels in the region. Other regions were still way below July 2008 levels: Northeast (-45%); South (-42.7%); and West (-37.2%).

Conference Board’s Leading U.S. Economic Indicators rose again in July for its fourth consecutive increase. The six-month change in the index has risen to three percent (a 6.2 percent annual rate) in the period through July, up substantially from -2.8 percent for the previous six months, and the strengths among the leading indicators have grown more widespread. Said Ken Goldstein, an economist at The Conference Board, “The indicators suggest that the recession is bottoming out, and that economic activity will likely begin recovering soon. The Leading Economic Index, which has increased for four consecutive months, suggests that the CEI will turn positive soon.”