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Residential Construction Getty Images 1126022466 Photovs
Residential Construction Getty Images 1126022466 Photovs

Electrical Marketing's Leading Economic Indicators - February 25, 2022 Update

Feb. 24, 2022
January 2022's number came in reasonably strong with permits up and architects still bullish.

Building permit data tracking higher in January

January’s building permits were at 1,899,000, +0.7% above the revised December rate of 1,885,000 and +0.8% above the January 2021 rate of 1,883,000. According to the U.S. Census Bureau, single‐family permits in January hit a rate of 1,205,000, +6.8% above the revised December figure of 1,128,000.

AIA architects remain reasonably bullish in January

The Architecture Billings Index (ABI) published monthly by the American Institute of Architecture (AIA) score for January was 51 points with no change from December's mark (any score over 50 points indicates billings growth).

“Architecture billings, while remaining at very healthy levels in recent months, have slowed considerably from the middle of last year,” said AIA Chief Economist Kermit Baker in the press release. “This no doubt reflects delays in the construction sector caused by supply challenges for both labor and materials, as well as ongoing staffing constraints at architecture firms.”

Leading indicators soften in January

The Conference Board Leading Economic Index (LEI) for the U.S. decreased by -0.3% in January to 119.6 (2016 = 100), following a +0.7% increase in December and a +0.8% increase in November.

“The U.S. LEI posted a small decline in January, as the Omicron wave, rising prices and supply chain disruptions took their toll,” said Ataman Ozyildirim, the Conference Board’s senior director of economic research, in the press release. “Initial claims for unemployment insurance, consumers’ outlook and declines in stock prices, and the average work week in manufacturing all contributed to the decline — the first since Feb. 2021.

“Despite this month’s decline and a deceleration in the LEI’s six-month growth rate, widespread strengths among the leading indicators still point to continued, albeit slower, economic growth into the spring. However, labor shortages, inflation and the potential of new COVID variants pose risks to growth in the near term. The Conference Board forecasts GDP growth for Q1 to slow somewhat from the very rapid pace of Q4 2021. Still, the U.S. economy is projected to expand by 3.5% percent in 2022 — well above the pre-pandemic growth rate, which averaged around 2%.”