Electrical Marketing's Leading Indicators

March 26, 2010
AIA Billings Index up in February Following a drop of nearly three points, the Architecture Billings Index (ABI) nudged up almost two points in February.

AIA Billings Index up in February

Following a drop of nearly three points, the Architecture Billings Index (ABI) nudged up almost two points in February. As a leading economic indicator of construction activity, the ABI reflects the approximate nine-to-twelve month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the February ABI rating was 44.8, up from a reading of 42.5 in January. This score indicates a continued decline in demand for design services, as any score above 50 indicates an increase in billings. The new projects inquiry score was 52 points.

“We continue to hear that funding dedicated for construction projects in the stimulus package has not yet been awarded, resulting in a bottleneck of potential projects that could help jump-start the economy,” said AIA Chief Economist Kermit Baker. “That, coupled with a persistently rigid credit market for private sector projects, is a key reason why the design and construction industry continue to suffer at near-historic levels in terms of job losses.”

PMI Index slips in February

Economic activity in the manufacturing sector expanded in February for the seventh consecutive month, and the overall economy grew for the 10th consecutive month, according to the Institute for Supply Management, Tempe, Ariz.

However, ISM's benchmark Purchasing Managers Index, a monthly survey of purchasing managers, declined 1.9 points, from 58.4 points to 56.5 points. Any reading over 50 points indicates the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

“While new orders and production were not as strong as they were in January, they still show significant month-over-month growth,” said Norbert Ore, chair of the Institute for Supply Management's Manufacturing Business Survey Committee. “Additionally, the Employment Index is very encouraging, as it is up 2.8 percentage points for the month to 56.1 percent, the third consecutive month of growth in the Employment Index.”

Leading Indicators Index still looks strong

The Conference Board's Leading Economic Index (LEI) for the U.S. increased 0.1 percent in February, following a 0.3 percent gain in January, and a 1.2 percent rise in December. Said Ataman Ozyildirim, an economist at the Conference Board, “The LEI for the U.S. has risen rapidly for almost a year now and it has reached its highest level. But, the sharp pick-up in the LEI appears to be stabilizing. As the U.S. economy moves from recovery into early phases of an expansion, the leading economic index points to moderately improving economic conditions in the near term.”

The Marketplace : Key Figures

Month Latest month Previous month over-month % change Year ago over-year % change 2008 annual CONSTRUCTION New Construction Put in Place (billions of dollars, SAAR)2 Offices JAN 32.26 32.8 -1.6 49.01 -34.2 40.79 Industrial JAN 55.06 57.84 -4.8 77.25 -28.7 74.7 Total JAN 884.13 889.62 -0.6 974.29 -9.3 939.23 Housing Starts (thousands of units, SAAR)2 FEB 575 611 -5.9 574 0.2 553 Single-unit FEB 499 502 -0.6 357 39.8 441 Mobile Homes JAN 48 49 -2 54 -11.1 50 Employment, Construction FEB 5,146 5,254 -2.1 6,000 -14.2 6,037 Employment, electrical JAN 734.6 765.1 -4 836.5 -12.2 795.8 Hourly Wage JAN 24.76 25.29 -2.1 24.57 0.8 24.76 PRODUCTION Industrial Production Index (1967=100)5 FEB 101 100.9 0.1 99.3 1.7 98.2 Construction Supplies Production Index5 FEB 80.8 80.5 0.3 84.6 -4.5 82.3 Employment, in Electrical Equipment & Supplies Mfg. Production Workers (thousands)4 JAN 141.4 140.8 0.4 156.8 -9.8 146.7 Weekly Hours JAN 41.4 40.8 1.5 40.2 3 39.6 Hourly Wage JAN 16.46 16.35 0.7 15.63 5.3 16.11 Electrical Power Output Index (1967=100)5 FEB 112.9 112 0.8 108.5 4 107.3 Machine Tool Orders* (millions of dollars)2 JAN 122.91 187.29 -34.4 91.39 34.5 Industrial Capacity Utilization (percent, SA)1 FEB 69.35 69.39 0 67.02 2.3 66.93 TRADE Elec. Mfr. Shipments (millions of dollars)2 JAN 2,446 2,711 -9.8 2,650 -7.7 Elec. Mfr. Inventories (millions of dollars)2 JAN 3,769 3,823 -1.4 4,686 -19.6 4,135 Elec. Mfr. I/S Ratio JAN 1.541 1.41 9.3 1.768 -12.9 1.585 Elec. Mfr. New Orders (millions of dollars)2 JAN 2,596 2,704 -4 2,201 17.9 Elec. Mfr. Unfilled Orders (millions of dollars)2 JAN 13,035 12,885 1.2 14,222 -8.3 13,242 Exports, Electrical Machinery (f.a.s. millions of dollars)2 JAN 5,709.00 5,954.00 -4.1 4,877.00 17.1 63,949.00 U.S. Dollar vs. Other Major Currencies (1973=100)5 FEB 103.7 102.1 1.6 111.8 -7.2 105.9 PRICES & INTEREST RATES Industrial Commodites Wholesale Price Index
(Bureau of Labor Statistics, 1967=100) FEB 183.5 184.7 -0.6 170.8 7.4 174.9 Electrical Price Index (Electrical Marketing, 1997=100) FEB 136.8 136.5 0.2 129.3 5.8 133.2 Construction Materials Wholesale Price Index
(Bureau of Labor Statistics, 1982=100) FEB 203.5 202 0.7 204.8 -0.6 202.9 Copper Price (Metals Week, cents per pound) MAR 341.16 315.92 8 175.7 94.2 239.28 Prime Rate5 FEB 3.3 3.3 0 3.3 0 3.3 Federal Funds Rate5 FEB 0.1 0.1 0 0.2 -0.1 0.2 Mortgage Rate7 FEB 5 5 0 5.1 -0.1 5 *Several series related to employment are now being reported on a NAICS basis. Because of this change, some numbers are not directly comparable to previously reported data, but are consistent in year-over-year comparisons and comparisons shown in the table.

Sources: 1McGraw-Hill Construction/Dodge; 2Dept. of Commerce; 3Manufactured Housing Institute; 4Dept. of Labor; 5Federal Reserve Board; 6The Association for Manufacturing Technology; 7Federal Home Loan Bank Board.

Note: Some figures shown — prime rate, for example — are averaged for month. NYA — not yet available

SA-seasonally adjusted. SAAR-seasonally adjusted annual rate. Source for chart: Global Insight.

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