PMI suffers big drop. The Purchasing Managers Index dropped 6.9 points in May to 53.5 percent, the first reading below 60 percent for 2011 and the lowest PMI reported for the past 12 months. Any reading above 50 still indicates a growth environment. “Slower growth in new orders and production are the primary contributors to this month’s lower PMI reading,” said Bradley Holcomb, chair of the Tempe, Ariz.-based Institute for Supply Management’s Manufacturing Business Survey Committee. “Manufacturing employment continues to show good momentum for the year, as the ISM Employment Index registered 58.2 percent, which is 4.5 percentage points lower than the 62.7 percent reported in April.”
Availability of credit still snuffing out construction projects. Almost two-thirds of architects surveyed last month by the American Institute of Architects (AIA), Washington, D.C., for its monthly Architectural Billings Index (ABI), reported they have at least one project stalled due to lack of financing, despite record low interest rates. The survey of April business activity was taken as part of the AIA’s Architectural Billings Index (ABI), a leading monthly economic indicator of construction activity that provides a glimpse into the future of nonresidential construction spending activity.
Of the 63 percent of firms surveyed with stalled projects, the average value of each project was almost $50 million per firm. Nearly half of respondents (45 percent) think that the availability of credit has become more restrictive over the past year, with just 16 percent seeing an easement in credit availability.
Leading economic indicators still pointing to growth. The Conference Board Leading Economic Index (LEI) for the United States. increased 0.8 percent in May to 114.7 (2004 = 100), following a 0.4 percent decline in April, and a 0.7 percent increase in March. The largest contributions came from the interest rate spread, consumer expectations, and housing permits. Said Ken Goldstein, economist at The Conference Board, “Modest economic growth is being buffeted by some strong headwinds, including high gas and food prices and a soft housing market. The economy will likely continue to grow through the summer and fall, however it will be choppy.”