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Electrical Marketing's Leading Economic Indicators - March 24, 2023 Update

March 23, 2023
February building permits come in well below Feb. 2022

February building permits were at a seasonally adjusted annual rate of 1,524,000, +13.8% above the revised January rate of 1,339,000, but -17.9% below the February 2022 rate of 1,857,000. The U.S. Census Bureau said single‐family authorizations in February were at a rate of 777,000, +7.6% above the revised January figure of 722,000.

Architects billing decline but AIA firms remain reasonably bullish for the future

More architecture firms reported a decline in billings in February, indicating an extension of a recent downturn in design activity according to a new report from the American Institute of Architects (AIA).

“The combination of an unsettled economy and high interest rates is causing investors and property owners to take a closer look at their plans for construction projects,” said AIA Chief Economist Kermit Baker. “While this is producing delays for some projects under design, architecture firms are reporting that prospects for future project work remain generally positive.”

Conference Board report for February points to softening economy

The Conference Board Leading Economic Index (LEI) for the U.S. fell again by -0.3% in Feb. 2023 to 110.0 (2016=100), after also declining by -0.3% in January. The LEI is down -3.6% over the six-month period between Aug. 2022 and Feb. 2023 — a steeper rate of decline than its -3% percent contraction over the previous six months (February–August 2022).

“The LEI for the U.S. fell again in February, marking its eleventh consecutive monthly decline,” said Justyna Zabinska-La Monica, senior manager, Business Cycle Indicators, at The Conference Board, in the press release. “Negative or flat contributions from eight of the index’s ten components more than offset improving stock prices and a better-than-expected reading for residential building permits. While the rate of month-over-month declines in the LEI have moderated in recent months, the leading economic index still points to risk of recession in the U.S. economy. The most recent financial turmoil in the U.S. banking sector is not reflected in the LEI data but could have a negative impact on the outlook if it persists.”