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Electrical Marketing’s Leading Economic Indicators - July 2017

Aug. 1, 2017
Strong indicators across architectural billings, permits and industrial purchasing.

June building permits surge 7.4%. Privately-owned housing units authorized by building permits in June were at a seasonally adjusted annual rate of 1,254,000, according to the U.S. Census Bureau. This is +7.4% above the revised May rate of 1,168,000 and +5.1% above the June 2016 rate of 1,193,000. Single-family authorizations in June were at a rate of 811,000, +4.1% above the revised May figure of 779,000. Authorizations of units in buildings with five units or more were at a rate of 409,000 in June.

ABI Index maintains growth pace in June. For the fifth consecutive month, architecture firms recorded increasing demand for design services as reflected in the June Architecture Billings Index (ABI) published monthly by the American Institute of Architects (AIA), Washington, D.C.

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. AIA reported the June ABI score was 54.2 points, up from a score of 53 points in the previous month. This score reflects an increase in design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 58.6 points, down from a reading of 62.4 points the previous month, while the new design contracts index decreased from 54.8 points to 53.7 points.

“So far this year, new activity coming into architecture firms has generally exceeded their ability to complete ongoing projects,” said AIA Chief Economist Kermit Baker. “Now, firms seem to be ramping up enough to manage these growing workloads.”

Purchasing managers remain bullish in June. The Institute for Supply Management, Tempe, AZ,  said its monthly Purchasing Managers Index (PMI) registered 57.8% in June, an increase of 2.9 percentage points from the May reading of 54.9%.  Any reading over 50 points means purchasing managers are a bullish industrial purchasing environment. The New Orders Index registered 63.5%, an increase of 4 percentage points from the May reading of 59.5%.