Electrical Marketing's Leading Indicators

Contractor employment reflects slow construction market

One of the most direct indicators of business conditions in the electrical market is how many people are employed at electrical contractors, and as you can see in the chart on this page, employment at these firms only increased marginally in May. According to the Bureau of Labor Statistics, electrical contractors had 720,900 employees in May, a 0.2-percent increase over April and up 1.23 percent over May 2010. However, this indicator is still running below the 2010 annual average of 723,200, and well below the 939,400 level it hit in Sept. 2008, the recent high. When you consider Electrical Wholesaling magazine estimates that every employee at an electrical contractor is worth $39,510 in sales potential, this decrease is even more dramatic.

U.S. railroad freight traffic moving slow

According to the Association of American Railroads (AAR), Washington, D.C., June 2011, like the previous couple of months, was not a great month for U.S. rail carload traffic. U.S. freight railroads originated 1,428,580 carloads in June 2011, an average of 285,716 per week — up 0.9% (13,232 carloads) over June 2010 and up 11.6% (148,793 carloads) over June 2009 on a non-seasonally adjusted basis. This follows an increase of just 0.5% in May 2011 over May 2010 and a decline of 0.2% in April 2011 from April 2010.

The AAR said in its Rail Time Indicators Report, “Demand for rail service occurs as a result of demand elsewhere in the economy for the products railroads haul. Thus, rail traffic is a useful gauge of broader economic activity, especially of the ‘tangible’ economy.”

PMI gathers strength

The Purchasing Managers Index (PMI) increased 1.8 points in June to 55.3 points, indicating expansion in the manufacturing sector for the 23rd consecutive month. According to the Tempe, Ariz.-based Institute for Supply Management, one purchasing manager in its Electrical Equipment, Appliances and Components group sensed “a slight slowdown in overall business in both domestic and international markets, although still above 2010 at the same time.”

The Marketplace : Key Figures

MonthLatest monthPrevious monthMonth-over-month % changeYear agoYear-over-year % change2010 annualCONSTRUCTION New Construction Put in Place (Billions of dollars, SAAR)² Total MAY 753.48 757.85 -0.6 811.25 -7.1 801.88 Offices MAY 21.19 20.92 1.3 24.19 -12.4 24.29 Industrial MAY 31.58 31.02 1.8 39.29 -19.6 37.63 Housing Starts (Thousands of units, SAAR)² Total JUN 629 549 14.6 539 16.7 585 Single-unit JUN 453 414 9.4 451 0.4 471 Mobile Home Shipments³ (Thousands of units, SAAR) MAY 48 46 4.3 56 -14.3 50 Employment, Construction Workers (Thousands)⁴ JUN 5,732 5,568 2.9 5,703 0.5 5,526 Employment, Electrical Contractors (Thousands)⁴ MAY 720.9 719.6 0.2 711.8 1.3 723.2 Hourly Wage, Electrical Contractors⁴ MAY 25.49 25.57 -0.3 25.31 0.7 25.26 PRODUCTION Industrial Production Index (1967=100)⁵ JUN 93.1 92.9 0.2 90 3.4 90.1 Construction Supplies Production Index⁵ (1977=100-SA) JUN 76.5 76.3 0.3 73.6 4 72.7 Employment in Electrical Equipment & Supplies Mfg. Production workers (Thousands)⁴ MAY 139.2 138.3 0.7 134.9 3.2 136.3 Weekly hours MAY 43.2 43.1 0.2 42.3 2.1 42.2 Hourly wage MAY 17.78 17.86 -0.4 16.3 9.1 16.51 Electric Power Output Index (1967=100)⁵ JUN 100.7 99.5 1.2 102.2 -1.4 100.6 Machine Tool Orders* (Millions of dollars)⁶ MAY 352.52 362.92 -2.9 164.68 114.1 Industrial Capacity Utilization (Percent, SA)¹ JUN 74.87 74.91 0 71.89 3 71.86 TRADE Electrical Mfrs' Shipments Electrical Mfrs' Inventories (Millions of dollars, SA)² MAY 3,698 3,601 2.7 3,540 4.5 Electrical Mfrs' Inventory-to-Shipments Ratio MAY 5,021 4,959 1.3 4,637 8.3 4,713 Electrical Mfrs' New Orders MAY 1.358 1.377 -1.4 1.31 3.7 1.364 (Millions of dollars, SA)² MAY 3,820 3,745 2 3,641 4.9 Electrical Mfrs' Unfilled Orders (Millions of dollars, SA)² MAY 14,390 14,268 0.9 11,831 21.6 12,156 Exports, Electrical Machinery (f.a.s. value in millions of dollars)² MAY 6,451.00 6,249.00 3.2 6,369.00 1.3 76,736.00 U.S. Dollar vs. Other Major Currencies (1973=100)⁵ JUL 95.2 95.5 -0.3 103.5 -8.1 102.1 PRICES & INTEREST RATES Industrial Commodities Wholesale Price Index (Bureau of Labor Statistics, 1967=100) JUN 205.1 205.9 -0.4 186.4 10 187 Electrical Price Index (Electrical Marketing, 1997=100) JUN 142.8 142.2 0.4 138.4 3.2 138.9 Construction Materials Wholesale Price Index (Bureau of Labor Statistics, 1982=100) JUN 213.9 213 0.4 206.6 3.5 205.7 Copper Prices (Metals Week, cents per pound) JUL 441.27 414.91 6.4 309.7 42.5 346.47 Prime Rate5 JUN 3.3 3.3 0 3.3 0 3.3 Federal Funds Rate⁵ JUN 0.1 0.1 0 0.2 -0.1 0.2 Mortgage Rate⁷ JUN 4.5 4.6 -0.1 4.7 -0.2 4.7

*Several series related to employment are now being reported on a NAICS basis. Because of this change, some numbers are not directly comparable to previously reported data, but are consistent in year-over-year comparisons and comparisons shown in the table.

Sources: ¹McGraw-Hill Construction/Dodge; ²Dept. of Commerce; ³Manufactured Housing Institute; ⁴Dept. of Labor; ⁵Federal Reserve Board; ⁶The Association for Manufacturing Technology; ⁷Federal Home Loan Bank Board.

Note: Some figures shown — prime rate, for example — are averaged for month. NYA — not yet available

SA-seasonally adjusted. SAAR-seasonally adjusted annual rate. Source for chart: Global Insight.

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