Electrical Marketing’s Leading Indicators, February 25, 2011

Feb. 25, 2011
Purchasing Managers Index spikes 2.3 points in January. Purchasing managers must be feeling downright giddy about the future, as the closely watched PMI broke the 60-point barrier in January

Purchasing Managers Index spikes 2.3 points in January. Purchasing managers must be feeling downright giddy about the future, as the closely watched PMI broke the 60-point barrier in January. Norbert Ore, chair of the Tempe, Ariz.-based Institute for Supply Management Manufacturing Business Survey Committee, said January’s 60.8 point performance is the PMI’s highest level since May 2004, when the index registered 61.4 percent.

U.S. Leading Indicators look good again in January. The Conference Board Leading Economic Index (LEI) for the U.S. continued its upward trend in January with a 0.1-percent increase to 112.3 points that follows a revised 0.8 percent increase in December and a 1.1 percent increase in November. Said Ataman Ozyildirim, a Conference Board economist, “With January’s slight increase, following two large gains, the U.S. LEI is still pointing to economic expansion in the coming months. Falling housing permits and weakening labor market indicators were barely offset by the continued positive contributions of the financial components. The LEI remains on a rising trend, with its growth rate picking up in recent months. However, current economic conditions, as measured by the coincident economic index, while improving slowly, remain weak.”

ABI slides three points in January. The Architecture Billings Index (ABI) had a drop of almost three points in January. As a leading economic indicator of construction activity, the ABI reflects the approximate nine- to twelve-month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the January ABI rating was 42.5 points, down sharply from a revised reading of 45.4 points in December. This score indicates a continued decline in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry score was 52.5 points, down more than seven points. “Projects are being delayed or cancelled because lending institutions are placing unusually stringent equity requirements on new developments. This is even happening to financially sound companies with strong credit ratings,” said AIA Chief Economist Kermit Baker.