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Electrical Marketing's Leading Economic Indicators - August 21 Update

Aug. 21, 2020

Building permits surge in July. Privately-owned housing units authorized by building permits in July were at a seasonally adjusted annual rate of 1,495,000, +18.8% above the revised June rate of 1,258,000 and +9.4% above the July 2019 rate of 1,366,000. The latest housing data from the U.S. Census Bureau showed that single-family authorizations in July were at a rate of 983,000, +17% above the revised June figure of 840,000.

Conference Board reports bump in July’s leading indicators but says economic outlook is still weak. The Conference Board Leading Economic Index (LEI) for the U.S. increased +1.4% in July to 104.4 (2016 = 100), following a +3% increase in June and a +3.1% increase in May.

“The U.S. LEI increased for the third consecutive month in July, albeit at a slower pace than the sharp increases in the previous two months,” said Ataman Ozyildirim, senior director of economic research at The Conference Board. “Despite the recent gains in the LEI, which remain fairly broad-based, the initial post-pandemic recovery appears to be losing steam. The LEI suggests that the pace of economic growth will weaken substantially during the final months of 2020.”

Purchasing Managers Index increases 1.6 points in July. The Institute for Supply Management’s (ISM) monthly survey of industrial purchasing managers is pointing to better business conditions down the road. Tim Fiore, chair of the ISM’s Manufacturing. Business Committee said the July PMI hit 54.2 points, up 1.6 points from the June reading. “This figure indicates expansion in the overall economy for the third month in a row after a contraction in April, which ended a period of 131 consecutive months of growth,” he said in a press release.

Freight-rail traffic remains soft. After bottoming out in May, total weekly rail traffic has continued to show some steady gains through early August, according to the American Association of Railroads (AAR). The association said that for the week ending Aug. 8, total U.S. weekly rail traffic was 497,397 carloads and intermodal units, down -6.7% compared with the same week last year. Freight rail shipments are a leading indicator.