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Electrical Marketing’s Leading Economic Indicators - March 2019

April 19, 2019
Building permits and freight rail traffic are down but PMI and LEI show strength.

Building permits slide in February. February building permits were at a seasonally adjusted annual rate of 1,296,000, -1.6% below the revised January rate of 1,317,000 and -2% below the Feb. 2018 rate of 1,323,000, according to the most recent data available at press-time from the U.S. Census Bureau. Single‐family authorizations in February were at a rate of 821,000, even with the revised January figure of 821,000.

March PMI gains. The March Purchasing Managers Index registered 55.3%, an increase of 1.1 percentage points from the February reading of 54.2%. The report, published monthly by the Institute for Supply Management (ISM) Manufacturing Business Survey Committee, explores the industrial purchasing environment. Any reading over 50 points indicates a bullish trend.

Freight rail traffic off to a slow start in 2019. U.S. railroads originated 957,144 carloads in March 2019, down -8.9%, or 93,616 carloads, from March 2018, according to the Association of American Railroads (AAR). U.S. railroads also originated 1,065,790 containers and trailers in March 2019, down -1.5%, or 16,387 units, from the same month last year. AAR says railroad freight traffic is considered to be a leading indicator of economic activity.

Total U.S. carload traffic for the first three months of 2019 was 3,195,609 carloads, down -3.1%, or 100,800 carloads, from the same period last year.

Leading indicators buck downward trend in February. The Conference Board Leading Economic Index (LEI) for the U.S. increased 0.2 percent in February to 111.5 (2016 = 100), following no change in January, and a 0.1 percent decline in December. “The US LEI increased in February for the first time in five months,” said Ataman Ozyildirim, director of economic research at The Conference Board. “February’s improvement was driven by accommodative financial conditions and a rebound in stock prices, which more than offset weaknesses in the labor market components. Despite the latest results, the U.S. LEI’s growth rate has slowed over the past six months, suggesting that while the economy will continue to expand in the near-term, its pace of growth could decelerate by year end.”