Electrical Marketing’s Leading Economic Indicators - December 20, 2013

Dec. 23, 2013
Architectural billings slip, but general leading indicators and building permits look strong.

AIA dips in November. After six months of steadily increasing demand for design services, the Architecture Billings Index (ABI) paused in November. Published monthly by the American Institute of Architects (AIA), Washington, D.C., the ABI is a leading economic indicator of construction activity that reflects the approximate nine- to twelve-month lead time between architecture billings and construction spending. AIA reported the November ABI score was 49.8 points, down from a mark of 51.6 in October points. Any score above 50 points indicates an increase in billings.

“Architecture firms continue to report widely varying views of business conditions across the country,”  said AIA Chief Economist Kermit Baker. “This slight dip is likely just a minor and hopefully temporary lull in the progress of current design projects. But there is a continued uneasiness in the marketplace as businesses attempt to determine the future direction of demand for commercial, industrial and institutional buildings.”

Leading Economic Index increases for fourth consecutive month. The Conference Board’s Leading Economic Index (LEI) for the U.S. increased 0.2 percent in October to 97.5 following a 0.9 percent increase in September, and a 0.7 percent increase in August.

“The recent increase in the index supports our forecast that the U.S. economy is poised to grow somewhat faster at 2.3% in 2014 compared to 1.6% in 2013,” said Ken Goldstein, an economist for The Conference Board. “Overall, the data reflect strengthening conditions in the underlying economy. However, headwinds still persist from the labor market, accompanied by business caution and concern about federal budget battles. The biggest challenge has been relatively weak consumer demand, which continues to be restrained by weak wage growth and slumping confidence.”

Building permits climb in November. Privately-owned housing units authorized by building permits in November were at a seasonally adjusted annual rate of 1,007,000 according the U.S. Census Bureau. This is 3.1% below the revised October rate of 1,039,000, but 7.9% above the Nov.  2012 estimate of 933,000. Single-family authorizations in November were at a rate of 634,000, 2.1% above the revised October figure of 621,000.