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Electrical Marketing's Leading Indicators - Jan. 28, 2022 Update

Jan. 27, 2022
The construction market looks like it should get off to a good start in 2022.

Building permits surge in December

Privately‐owned housing units authorized by building permits in December were at a seasonally adjusted annual rate of 1,873,000, +9.1% above the revised November rate of 1,717,000 and +6.5% above the Dec. 2020 rate of 1,758,000. The U.S. Census Bureau said single‐family authorizations in December were at a rate of 1,128,000, +2% above the revised November figure of 1,106,000. An estimated 1,724,700 housing units were authorized by building permits in 2021, +17.2% above the 2020 figure of 1,471,100.

AIA says its members ended 2021 on a high note

December’s score of 52 points in the Architectural Billings Index (ABI) published by the American Institute of Architects (AIA) was an increase from 51 points in November (any score over 50 points indicates billings growth). Despite a variety of concerns related to the Omicron variant, labor shortages and rising prices as well as limited availability of construction materials, firms continued to report a robust supply of work in the pipeline.

“Since demand for design projects has been healthy over the last year, recruiting architectural staff to keep up with project workloads has been a growing concern for firms,” said AIA Chief Economist Kermit Baker in the press release. “Architecture is one of the few industries where payrolls have already surpassed their pre-pandemic high, so meeting future staffing needs is a challenge that most firms will need to confront.”

Leading indicators expected to start strong in 2022

“The U.S. LEI ended 2021 on a rising trajectory, suggesting the economy will continue to expand well into the spring,” said Ataman Ozyildirim, senior director of Economic Research at The Conference Board, in the press release. “For the first quarter, headwinds from the Omicron variant, labor shortages and inflationary pressures — as well as the Federal Reserve’s expected interest rate hikes — may moderate economic growth. The Conference Board forecasts GDP growth for Q1 2022 to slow to a relatively healthy +2.2% (annualized). Still, for all of 2022, we forecast the U.S. economy will expand by a robust +3.5 percent — well above the pre-pandemic trend growth.”