Electrical Marketing's Leading Indicators

AIA Index drops again

Following a drop of almost a full point in June, the Architecture Billings Index (ABI) fell again by more than a point in July. 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), Washington, D.C., reported the July ABI score was 45.1 points — the steepest decline in billings since February 2010. This score reflects a continued decrease in demand for design services (any score above 50 points indicates an increase in billings).

“Business conditions for architecture firms have turned down sharply,” said AIA Chief Economist, Kermit Baker. “Late last year and in the first couple of months of this year there was a sense that we were slowly pulling out of the downturn, but now the concern is that we haven't yet reached the bottom of the cycle. Current high levels of uncertainly in the economy don't point to an immediate turnaround.”

PMI slides 4.4 points

The Purchasing Managers Index (PMI) dropped 4.4 points in July but is still in growth territory, according to the Institute for Supply Management (ISM), Tempe, Ariz. Bradley Holcomb, chair of the ISM's Manufacturing Business Survey Committee, said while the PMI still indicates growth in the industrial market, it appears conditions may be softening.

Leading Indicators up a smidge

The Conference Board Leading Economic Index (LEI) for the U.S. increased 0.5 percent in July to 115.8, following a 0.3 percent increase in June, and a 0.7 percent increase in May. The largest positive contributions came from money supply, the interest rate spread, and average weekly initial claims for unemployment insurance. Said Ataman Ozyildirim, an economist at The Conference Board, “The U.S. LEI continued to increase in July. However, with the exception of the money supply and interest rate components, other leading indicators show greater weakness — consistent with increasing concerns about the health of the economic expansion. Despite rising volatility, the leading indicators still suggest economic activity should be slowly expanding through the end of the year.”

The Marketplace: Key Figures

MonthLatest monthPrevious monthMonth-over-month % changeYear agoYear-over-year % change2008 annualCONSTRUCTION New Construction Put in Place (Billions of dollars, SAAR)² Total JUN 772.32 770.52 0.2 810.44 -4.7 801.88 Offices JUN 21.44 21.34 0.5 23.84 -10.1 24.29 Industrial JUN 33.92 32.63 4 38.48 -11.8 37.63 Housing Starts (Thousands of units, SAAR)² Total JUL 604 613 -1.5 550 9.8 585 Single-unit JUL 425 447 -4.9 429 -0.9 471 Mobile Home Shipments³ (Thousands of units, SAAR) JUN 50 48 4.2 55 -9.1 50 Employment, Construction Workers (Thousands)⁴ JUL 5,814 5,734 1.4 5,771 0.7 5,526 Employment, Electrical Contractors (Thousands)⁴ JUN 730.8 721.5 1.3 728.9 0.3 723.2 Hourly Wage, Electrical Contractors⁴ JUN 25.43 25.44 0 25.31 0.5 25.26 PRODUCTION Industrial Production Index (1967=100)5 JUL 94.2 93.3 0.9 90.8 3.7 90.1 Construction Supplies Production Index⁵ (1977=100-SA) JUL 76.5 76.3 0.3 73.3 4.4 72.7 Employment in Electrical Equipment & Supplies Mfg. Production workers (Thousands)⁴ JUN 140.4 139.2 0.9 136 3.2 136.3 Weekly hours JUN 43.2 43 0.5 42.3 2.1 42.2 Hourly wage JUN 17.8 17.75 0.3 16.27 9.4 16.51 Electric Power Output Index (1967=100)⁵ JUL 103.2 99.8 3.4 102.9 0.3 100.6 Machine Tool Orders* (Millions of dollars)⁶ JUN 396.95 362.77 9.4 226.48 75.3 Industrial Capacity Utilization (Percent, SA)¹ JUL 75.47 75.07 0.4 72.63 2.8 71.86 TRADE Electrical Mfrs' Shipments JUN 3,733 3,705 0.8 3,556 5.0 Electrical Mfrs' Inventories (Millions of dollars, SA)² JUN 4,999 5,017 -0.4 4,775 4.7 4,713 Electrical Mfrs' Inventory-to-Shipments Ratio JUN 1.339 1.354 -1.1 1.343 -0.3 1.364 Electrical Mfrs' New Orders (Millions of dollars, SA)² JUN 3,828 3,816 0.3 3,853 -0.6 Electrical Mfrs' Unfilled Orders (Millions of dollars, SA)² JUN 14,474 14,379 0.7 12,128 19.3 12,156 Exports, Electrical Machinery (f.a.s. value in millions of dollars)² JUN 6,454.00 6,451.00 0 6,500.00 -0.7 76,736.00 U.S. Dollar vs. Other Major Currencies (1973=100)⁵ AUG 95.3 94.8 0.5 102.7 -7.2 102.1 PRICES & INTEREST RATES Industrial Commodities Wholesale Price Index (Bureau of Labor Statistics, 1967=100) JUL 206.1 205.1 0.5 186.7 10.4 187 Electrical Price Index (Electrical Marketing, 1997=100) JUL 143.9 142.8 0.7 138.4 4 138.9 Construction Materials Wholesale Price Index (Bureau of Labor Statistics, 1982=100) JUL 214.7 213.9 0.4 206.3 4.1 205.7 Copper Prices (Metals Week, cents per pound) AUG 414.89 444.13 -6.6 335.98 23.5 346.47 Prime Rate⁵ JUL 3.3 3.3 0 3.3 0 3.3 Federal Funds Rate⁵ JUL 0.1 0.1 0 0.2 -0.1 0.2 Mortgage Rate⁷ JUL 4.6 4.5 0 4.6 0 4.7

*Several series related to employment are now being reported on a NAICS basis. Because of this change, some numbers are not directly comparable to previously reported data, but are consistent in year-over-year comparisons and comparisons shown in the table.

Sources: ¹McGraw-Hill Construction/Dodge; ²Dept. of Commerce; ³Manufactured Housing Institute; ⁴Dept. of Labor; ⁵Federal Reserve Board; ⁶The Association for Manufacturing Technology; ⁷Federal Home Loan Bank Board.

Note: Some figures shown — prime rate, for example — are averaged for month. NYA — not yet available

SA-seasonally adjusted. SAAR-seasonally adjusted annual rate. Source for chart: Global Insight.

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