Electrical Marketing’s Leading Economic Indicators - March 2017

Building permits enjoy 4.4% YOY growth. Privately-owned housing units authorized by building permits in February were at a seasonally adjusted annual rate of 1,213,000, 6.2% below the revised January rate of 1,293,000, but 4.4% above the February 2016 rate of 1,162,000. Single-family authorizations in February were at a rate of 832,000.

ABI  starts slow but expected to improve. The Architecture Billings Index (ABI) returned to growth mode in February after a weak showing in January. 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) reported the February ABI score was 50.7, up from a score of 49.5 in the previous month.

“The sluggish start to the year in architecture firm billings should give way to stronger design activity as the year progresses,” said AIA Chief Economist, Kermit Baker. “New project inquiries have been very strong through the first two months of the year, and in February new design contracts at architecture firms posted their largest monthly gain in over two years.”

Purchasing Managers Index remains in growth territory. The February PMI registered 57.7%, an increase of 1.7 percentage points from the January reading of 56%, according to the Institute for Supply Management, Tempe, AZ. Any reading over 50 points means  purchasing managers are optimistic about the business climate.

Leading economic indicators point to solid 2017 economy. The Conference Board’s Leading Economic Index (LEI) for the U.S. increased 0.6% in February to 126.2 (2010 = 100), following a 0.6% increase in January, and a 0.6% increase in December. “After six consecutive monthly gains, the U.S. LEI is at its highest level in over a decade,” said Ataman Ozyildirim,  the Conference Board’s director of business cycles and growth research. “Widespread gains across a majority of the leading indicators points to an improving economic outlook for 2017, although GDP growth is likely to remain moderate. Only housing permits contributed negatively to the LEI in February, reversing gains over the previous two months.”