Electrical Marketing's Leading Indicators

PMI stays in growth mode

The Purchasing Managers Index increased one point in September to 51.6 percent, indicating expansion in the manufacturing sector for the 26th consecutive month, at a slightly higher rate. Bradley Holcomb, chair of the Tempe, Ariz.-based Institute for Supply Management's Manufacturing Business Survey Committee said, “Comments from respondents generally reflect concern over the sluggish economy, political and policy uncertainty in Washington, and forecasts of ongoing high unemployment that will continue to put pressure on demand for manufactured products.”

AIA Billings Index slides again in September

Following the first positive score in four months, the Architecture Billings Index (ABI) reversed direction. The ABI reflects the approximate nine- to twelve-month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the September ABI score was 46.9 points, following a score of 51.4 points in August. This score reflects a sharp decrease in demand for design services (any score above 50 points indicates an increase in billings). The new projects inquiry index was 54.3 points, down from a reading of 56.9 points the previous month.

“It appears that the positive conditions seen last month were more of an aberration,” said AIA Chief Economist, Kermit Baker. “The economy is weak enough at present that design activity is bouncing around more than usual; one strong month can be followed by a weak one. The economy needs to be stronger to generate sustained growth in design activity.”

Leading Indicators dip in September

The Conference Board Leading Economic Index (LEI) for the U.S. increased 0.2 percent in September to 116.4, following a 0.3 percent increase in August and a 0.6 percent increase in July. Said Ken Goldstein, an economist at The Conference Board, “The LEI is pointing to soft economic conditions through the end of 2011. There is a risk that already low confidence — consumer, business and investor — could weaken further, putting downward pressure on demand and tipping the economy into recession. The probability of a downturn starting over the next few months remains at about 50 percent.”

The Marketplace: Key Figures

Month Latest month Previous month Month-over-month % change Year ago Year-over-year % change 2010 annual CONSTRUCTIONNew Construction Put in Place (Billions of dollars, SAAR)² Offices AUG 24.22 24.19 0.1 23.52 3.0 24.29 Industrial AUG 36.29 35.64 1.8 35.17 3.2 37.63 Total AUG 799.15 788.31 1.4 791.75 0.9 801.88 Housing Starts (Thousands of units, SAAR)² Single-unit SEP 425 418 1.7 447 -4.9 471 Total SEP 658 572 15.0 597 10.2 585 Mobile Home Shipments³ (Thousands of units, SAAR) AUG 49 47 4.3 50 -2.0 50 Employment, Construction Workers (Thousands)⁴ SEP 5,794 5,834 -0.7 5,744 0.9 5,526 Employment, Electrical Contractors (Thousands)⁴ AUG 755.0 751.1 0.5 742.7 1.7 723.2 Hourly Wage, Electrical Contractors⁴ AUG 26.16 25.64 2.0 25.33 3.3 25.26 PRODUCTIONIndustrial Production Index (1967=100)⁵ SEP 94.2 94.0 0.2 91.2 3.2 90.1 Construction Supplies Production Index⁵ (1977=100-SA) SEP 77.0 76.8 0.2 73.8 4.3 72.7 Employment in Electrical Equipment & Supplies Mfg. Production workers (Thousands)⁴ AUG 141.6 141.9 -0.2 137.4 3.1 136.3 Weekly hours AUG 43.2 42.5 1.6 42.2 2.4 42.2 Hourly wage AUG 18.03 17.86 1.0 16.66 8.2 16.51 Electric Power Output Index (1967=100)⁵ SEP 97.8 100.2 -2.4 101.7 -3.9 100.6 Machine Tool Orders* (Millions of dollars)⁶ AUG 417.75 403.58 3.5 232.34 79.8 Industrial Capacity Utilization (Percent, SA)¹ SEP 75.69 75.47 0.2 73.04 2.7 71.86 TRADEElectrical Mfrs' Shipments AUG 3,915 3,649 7.3 3,587 9.1 Electrical Mfrs' Inventories (Millions of dollars, SA)² AUG 5,024 5,013 0.2 4,870 3.2 4,713 Electrical Mfrs' Inventory-to-Shipments Ratio AUG 1.283 1.374 -6.6 1.358 -5.5 1.364 Electrical Mfrs' New Orders (Millions of dollars, SA)² AUG 3,822 3,818 0.1 3,797 0.7 Electrical Mfrs' Unfilled Orders (Millions of dollars, SA)² AUG 14,580 14,673 -0.6 12,405 17.5 12,156 Exports, Electrical Machinery (f.a.s. value in millions of dollars)² AUG 6,641.0 6,462.0 2.8 6,551.0 1.4 76,736.0 U.S. Dollar vs. Other Major Currencies (1973=100)⁵ SEP 98.0 95.2 3.0 101.5 -3.4 101.9 PRICES & INTEREST RATESIndustrial Commodities Wholesale Price Index (Bureau of Labor Statistics, 1967=100) SEP 204.8 203.8 0.5 186.8 9.6 187.0 Electrical Price Index (Electrical Marketing, 1997=100) SEP 141.3 145.6 -2.9 138.6 1.9 138.9 Construction Materials Wholesale Price Index (Bureau of Labor Statistics, 1982=100) SEP 213.9 214.8 -0.4 205.9 3.9 205.7 Copper Prices (Metals Week, cents per pound) OCT 331.62 377.78 -12.2 381.31 -13.0 346.47 Prime Rate⁵ SEP 3.3 3.3 0.0 3.3 0.0 3.3 Federal Funds Rate⁵ SEP 0.1 0.1 0.0 0.2 -0.1 0.2 Mortgage Rate⁷ SEP 4.1 4.3 -0.2 4.4 -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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