Electrical Marketing’s Key Economic Indicators: Permits and architect billings drop

April 25, 2014
PMI suggests manufacturing is still growing, but permits dip and architectural billings look surprisingly soft.

Building permits dip in March. Privately-owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 990,000. This is 2.4% below the revised February rate of 1,014,000, but 11.2% above the March 2013 estimate of 890,000. Single-family authorizations in March were at a rate of 592,000, 0.5% percent above the revised February figure of 589,000. Authorizations of units in buildings with five units or more were at a rate of 370,000 in March.

AIA’s Architecture Billings Index drops dramatically in March. Following a modest two-month recovery in the level of demand for design services, the Architecture Billings Index (ABI) again turned negative last month. 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 March ABI score was 48.8 points, down sharply from a mark of 50.7 points in February.

This score reflects a decrease in design services (any score above 50 points indicates an increase in billings). The new projects inquiry index was 57.9 points, up from the reading of 56.8 points the previous month. The score for design contracts in March was 48.2 points. This is a new indicator AIA added this month that measures the trends in new design contracts at architecture firms that can provide a strong signal of the direction of future architecture billings.

“This protracted softening in demand for design services is a bit of a surprise given the overall strength of the market the last year and a half,” said AIA Chief Economist Kermit Baker. “Hopefully, some of this can be attributed to severe weather conditions over this past winter.”

PMI pushes upward again. The March Purchasing Managers Index (PMI) registered 53.7%, an increase of 0.5 percentage point from February’s reading of 53.2% percent, according to the Tempe, Ariz.-based Institute for Supply Management (ISM) Manufacturing Business Survey Committee. Any reading over 50% indicated an expanding business climate.