Electrical Marketing’s Leading Indicators, January 28, 2011

Jan. 28, 2011
ABI looks solid. The Architecture Billings Index (ABI) jumped more than two points in December, its highest mark since 2007

ABI looks solid. The Architecture Billings Index (ABI) jumped more than two points in December, its highest mark since 2007. Published by the American Institute of Architects (AIA), Washington, D.C., the ABI is a leading economic indicator of construction activity and reflects the approximate nine- to twelve-month lag time between architecture billings and construction spending. The AIA reported the December ABI score was 54.2 points, up from a reading of 52 points the previous month. This score reflects an increase in demand for design services (any score above 50 points indicates an increase in billings). The new projects inquiry index was 62.6 points, up slightly from a mark of 61.4 points in November.

“This is more promising news that the design and construction industry is continuing to move toward a recovery,” said AIA Chief Economist, Kermit Baker. “However, historically December is the most unpredictable month from a business standpoint, and therefore the most difficult month from which to interpret a trend. The coming quarter will give us a much better sense of the strength of the apparent upturn in design activity. ”

Purchasing Managers Index in solid growth territory. The Purchasing Managers Index (PMI) is on the rise, and increased +0.4 points to 57 points in December. Norbert Ore, chair of the Tempe, Ariz.-based Institute for Supply Management Manufacturing Business Survey Committee, which publishes the PMI, said, “The manufacturing sector continued its growth trend as indicated by this month’s report. We saw significant recovery for much of the U.S. manufacturing sector in 2010. The recovery centered on strength in autos, metals, food, machinery, computers and electronics, while those industries tied primarily to housing continue to struggle.

“Additionally, manufacturers that export have benefitted from both global demand and the weaker dollar. December’s strong readings in new orders and production, combined with positive comments from the panel, should create momentum as we go into the first quarter of 2011.”

Leading Economic Indicators rise again. The Conference Board Leading Economic Index (LEI) for the U.S. increased one percent in December to 112.4 following a 1.1 percent increase in November, and a 0.4 percent increase in October. Said Ken Goldstein, an economist at The Conference Board, “The four-month rise suggests the economy now has some wind in its sails; however, it still faces some strong headwinds in the medium-term. Overall economic activity is likely to continue to gain momentum in 2011.”