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Electrical Marketing's Leading Economic Indicators - October 2017

Oct. 21, 2017
Building permits were soft and architect billings slipped but the Purchasing Managers Index remains strong.

Building permits sag in September. Privately-owned housing units authorized by building permits in September were at a seasonally adjusted annual rate of 1,215,000, 4.5% below the revised August rate of 1,272,000 and 4.3% below the Sept. 2016 rate of 1,270,000. Single-family authorizations in September were at a rate of 819,000, +2.4% percent above the revised August figure of 800,000. Authorizations of units in buildings with five units or more were at a rate of 360,000 in September.

AIA’s Billings Index slows down in September. After seven months of steady growth in the demand for design services, the Architecture Billings Index (ABI) paused in September.  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 September ABI score was 49.1, down from a score of 53.7 in the previous month. This score reflects a slight decrease in design services provided by U.S. architecture firms (any score above 50 indicates an increase in billings). The new projects inquiry index was 59.0, down from a reading of 62.5 the previous month, while the new design contracts index eased somewhat from 54.2 to 52.9.

“We’ve seen unexpectedly strong numbers in design activity for most of 2017, so the pause in September should be viewed in that context,” said AIA Chief Economist Kermit Baker. “Project inquiries and new design contracts remain healthy, and the continued strength in most sectors and regions indicates stability industry-wide.”

Purchasing Managers Index continues growth track in September. The September Purchasing Managers Index (PMI) registered 60.8 percent, an increase of 2 percentage points from the August reading of 58.8%. The Purchasing Managers Index is a monthly survey of industrial purchasing managers conducted monthly by the Tempe, AZ-based Institute for Supply Management’s  Manufacturing Business Survey Committee. Any reading over 50 points indicates a growth environment.