Electrical Marketing’s Key Economic Indicators

Dec. 23, 2011
AIA bounces into positive territory; PMI increases 1.9 points in November; Machine tool orders up 80.5% YTD

AIA bounces into positive territory. Continuing the positive momentum of a nearly three-point bump in October, the Architecture Billings Index (ABI) hit growth territory in November for the first time since August. As a leading economic indicator of construction activity, the ABI, published monthly by the American Institute of Architects (AIA), Washington, D.C., reflects the approximate nine- to twelve-month lag time between architecture billings and construction spending.

The AIA reported the November ABI score was 52 points, a 2.6-point increase over October. This score reflects an overall increase in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 65 points, up dramatically from a reading of 57.3 points the previous month.

“This is a heartening development for the design and construction industry that only a few years ago accounted for nearly ten percent of overall GDP but has fallen to slightly less than six percent,” said AIA Chief Economist, Kermit Baker. “Hopefully, this uptick in billings is a sign that a recovery phase is in the works. However, given the volatility that we’ve seen nationally and internationally recently, we’ll need to see several more months of positive readings before we’ll have much confidence that the U.S. construction recession is ending.”

PMI increases 1.9 points in November. The Purchasing Managers Index ventured further into growth territory last month with a 1.9-point increase to 52.7 points. The PMI had been stuck in a range of 50-51 points since July, which is dangerously close to the sub-50 levels that indicates a contracting economy, according the Institute of Supply Management, Tempe, Ariz., which publishes the PMI each month.

Machine tool orders up 80.5% YTD over 2010. U.S. orders for machine tools in October totaled $463.32 million, according to the Association For Manufacturing Technology (AMT) and AMTDA, the American Machine Tool Distributors’ Association. This total was down 22.4% from September but up 20.3% when compared with the total of $385.21 million reported for October 2010. With a year-to-date total of $4.53 billion, 2011 is up 80.5% compared with 2010.