Electrical Marketing’s Key Economic Indicators

June 22, 2012
Builder confidence holding steady, but Purchasing Managers index and Dodge Momentum index tick downward

Builder confidence rises one point in June. Builder confidence in the market for newly built, single-family homes gained one point in June from a slightly revised level in the previous month to rest at 29 on the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). This is the highest level the index has attained since May 2007. “This month’s modest uptick in builder confidence comes on the heels of a four-point gain in May and is reflective of the continued, gradual improvement we are seeing in many individual housing markets as more buyers decide to take advantage of today’s low prices and interest rates,” said Barry Rutenberg, NAHB chairman and a home builder from Gainesville, Fla. “While the June HMI is in keeping with our forecast for gradually improving single-family home sales this year, recent economic reports that have shown some weakening in the pace of recovery likely factored into the marginal gain,” said NAHB Chief Economist David Crowe.

Purchasing Managers Index slips 1.3 points in April but still in positive territory. While economic activity in the manufacturing sector expanded in May for the 34th consecutive month according to the Institute for Supply Management (ISM), Tempe, Ariz., Bradley Holcomb, chair of ISM’s Manufacturing Business Survey Committee, said the association’s Purchasing Managers Index registered 53.5, a modest decrease of 1.3 percentage points from April’s reading of 54.8, but still over the 50-point mark indicating expansion.

Dodge Momentum Index slides 1.2% in May. The Dodge Momentum Index moderated in May, slipping 1.2% from April, according to McGraw-Hill Construction. The Index is a measure of first-reported nonresidential building projects at the planning stage, which have been shown to lead construction spending for nonresidential buildings by a full year. The Index now resides at 93.6 (2000=100) compared to the prior month’s 94.8. The May decrease follows a one-percent gain in April when the Index hit its highest level since August 2010. The moderation in the May Index was in line with the increasingly unsettled economic environment and the recent downward revisions to both gross domestic product and employment.