AIA Billings Index drops in January
A leading indicator of U.S. nonresidential construction spending fell in January to its lowest level since August 2009 as more construction projects were delayed or canceled. According to the American Institute of Architects, the Architecture Billings Index (ABI) was down last month 2.9 points to 42.5. The index has remained below 50 since January 2008 indicating soft demand for design services.
“Lending institutions are placing unusually stringent equity requirements on new developments,” said AIA Chief Economist Kermit Baker. “This serious situation is being compounded by a skittish bond market, decreased tax revenues for publicly financed projects and declining property values,” he said.
PMI Index registers strong gain in January
According the Purchasing Managers Index (PMI) published monthly by the Institute for Supply Management, Tempe, Ariz., economic activity in the manufacturing sector expanded in January for the sixth consecutive month and the overall economy grew for the ninth consecutive month. Said Norbert Ore, chair of the Institute for Supply Management Manufacturing Business Survey Committee, “The manufacturing sector grew for the sixth consecutive month in January as the PMI rose to 58.4 percent, its highest reading since August 2004 when it registered 58.5 percent. This month's report provides significant assurance that the manufacturing sector is in recovery.”
Leading Economic Index (LEI) points toward growth
The Conference Board's Leading Economic Index for the U.S. increased 0.3 percent in January, following a 1.2 percent gain in December and a 1.1 percent rise in November. Says Ataman Ozyildirim, an economist at the Conference Board, “The U.S. LEI has risen steadily for nearly a year, led by an improvement in financial markets and a manufacturing upturn. Consumer expectations and housing permits have also contributed to these gains over this period, but to a lesser extent — especially in recent months. Current economic conditions, as measured by the Conference Board Coincident Economic Index (CEI), have also improved modestly since July 2009, helped by strengthening industrial production, despite continued weakness in employment.”
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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