Electrical Marketing’s Key Economic Indicators

April 19, 2012
Architectural billings strong, especially commercial; Conference Board sees strength.

Architecture billings strong

The commercial sector continues to lead the Architecture Billings Index (ABI), which has remained in positive territory for the fifth consecutive month. As a leading economic indicator of construction activity, 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 March ABI score was 50.4 points, following a mark of 51 points in February. This score reflects a slight increase in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 56.6 points, down from mark of 63.4 points the previous month.

“We are starting to hear more about improving conditions in the marketplace, with a greater sense of optimism that there will be greater demand for design services,” said AIA Chief Economist Kermit Baker. “But that is not across the board and there are still a number of architecture firms struggling, so progress is likely to be measured in inches rather than miles for the next few months.”

Broken down by sector, the ABI shows commercial/industrial and multi-family residential billings improving while institutional and “mixed practice” slow down.

U.S. LEI Increases

The Conference Board’s Leading Economic Index (LEI) for the U.S. increased 0.3 percent in March to 95.7 (2004 = 100), following a 0.7 percent increase in February, and a 0.2 percent increase in January.

Says Ataman Ozyildirim, economist at The Conference Board, “The LEI increased for the sixth consecutive month, pointing to a more positive outlook despite subdued consumer expectations and weakness in manufacturing new orders. Moreover, the six-month growth rate of the LEI continues to improve. The CEI, a measure of current economic conditions, has also increased in five of the last six months, with broad-based gains in all components.”

Ken Goldstein, another Conference Board economist, said, “Despite relatively weak data on jobs, home building and output in the past month or two, the indicators signal continued economic momentum. We expect a gradual improvement in growth past the summer months.”