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Electrical Marketing’s Leading Economic Indicators - May 2017

June 26, 2017
Architect billings and PMI look strong but building permits weak

Total building permits lose momentum in May. Privately-owned housing units authorized by building permits in May were at a seasonally adjusted annual rate of 1,168,000. This is- 4.9% below the revised April rate of 1,228,000 and 0.8% below the May 2016 rate of 1,178,000, according to the most recent housing data from the U.S. Department of Commerce. Single-family authorizations in May were at a rate of 779,000, -1.9% below the revised April figure of 794,000. Authorizations of units in buildings with five units or more were at a rate of 358,000 in May.

Purchasing managers see continuing growth. Economic activity in the manufacturing sector expanded in May, and the overall economy grew for the 96th consecutive month, the nation’s supply executives said in the Institute for Supply Management’s latest Report On Business. The May PMI registered 54.9%, a slight increase from the April reading of 54.8%. Any reading above 50% means purchasing managers are optimistic about the business climate for manufacturing. New Orders, Employment, Inventories indices were all up while Production and Prices registered slight declines from April levels.

Architect billings post fourth straight month of growth. Design services at architecture firms continue to suggest ongoing vitality for the construction industry as the Architecture Billings Index (ABI) recorded the fourth consecutive month of growth. The ABI is a nine- to 12-month leading economic indicator of construction activity. The American Institute of Architects (AIA) reported the May ABI score was 53.0, up from a score of 50.9 in the previous month. Any score above 50 indicates an increase in design billings. The AIA’s new projects inquiry and new design contracts indices were also up.

“The fact that the data surrounding both new project inquiries and design contracts have remained positive every month this year, while reaching their highest scores for the year, is a good indication that both the architecture and construction sectors will remain healthy for the foreseeable future,” AIA Chief Economist Kermit Baker said in a release. “This growth hasn’t been an overnight escalation, but rather a steady, stable increase.”