Electrical Marketing's Leading Economic Indicators - June 18, 2021 Update

Building permits decline -3% in May. Privately‐owned housing units authorized by building permits in May were at a seasonally adjusted annual rate of 1,681,000, -3% below the revised April rate of 1,733,000, but +34.9% above the May 2020 rate of 1,246,000. Single‐family authorizations in May were at a rate of 1,130,000, -1.6% below the revised April figure of 1,148,000. “Single-family permits declined to the lowest pace since September 2020 as the home building market cools somewhat to adjust to higher prices and longer delivery times of building materials,” said NAHB Chief Economist Robert Dietz. “The count of single-family homes permitted but not started construction is up 53% over the last year due to both gains for home construction since the onset of the 2020 virus crisis and the delay of some building projects due to higher costs for materials and labor.”

Leading indicators continue growth trend in May. The Conference Board Leading Economic Index (LEI) for the U.S. increased by +1.3% in May to 114.5 (2016 = 100), following a +1.3% increase in April and a +1.4% increase in March. “After another large improvement in May, the U.S. LEI now stands above its previous peak reached in Jan. 2020, suggesting that strong economic growth will continue in the near term,” said Ataman Ozyildirim, senior director of economic research at The Conference Board, in the press release. “The Conference Board now forecasts real GDP growth in Q2 could reach +9% (annualized), with year-over-year economic growth reaching +6.6% for 2021.”

May construction data edges lower. Total construction starts dropped -1% in May to a seasonally adjusted annual rate of $902.8 billion, according to Dodge Data & Analytics. “The weight of higher material prices and a lack of skilled labor are having a direct and notable influence on residential construction activity,” said Richard Branch, chief economist for Dodge Data & Analytics, in the press release. “These negative factors are expected to continue to impact the sector over the remainder of the year and will result in a less positive influence from housing on overall levels of construction activity.”