Electrical Marketing’s Leading Economic Indicators

Builder confidence hits major milestone, entering growth territory in June. Builder confidence in the market for new single-family homes hit a milestone in June, rising eight points to 52 points on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released June 17. Any reading over 50 points indicates that more builders view sales conditions as good than poor, and the HMI hasn’t been over 50 points in a long, long time.

“This is the first time the HMI has been above 50 since April 2006, and surpassing this important benchmark reflects the fact that builders are seeing better market conditions as demand for new homes increases,” said Rick Judson, NAHB chairman and a home builder and developer from Charlotte, N.C.

The eight-point jump in the index was the biggest one-month gain since August and September of 2002, when the HMI recorded a similar increase of eight points. All three HMI components posted gains in June — current sales conditions increased eight points to 56, future sales rose nine points to 61 (its highest level since March 2006) and traffic of prospective buyers rose seven points to 40.

Manufacturing grows soft as PMI falls below 50. Economic activity in the manufacturing sector contracted in May for the first time since November 2012 according to supply executives surveyed in the latest Manufacturing ISM Report On Business. The Purchasing Managers Index (PMI) registered 49%, a decrease of 1.7 percentage points from April’s reading of 50.7 percent, indicating contraction in manufacturing for only the second time since July 2009. This month’s PMI is at its lowest level since June 2009, when it registered 45.8 percent.

The New Orders Index decreased in May by 3.5 percentage points to 48.8 percent, and the Production Index decreased by 4.9 percentage points to 48.6 percent. The Institute for Supply Management (ISM) said several comments from the panel indicated a flattening or softening in demand due to a sluggish economy, both domestically and globally. On the upside, Electrical Equipment was one of the 10 manufacturing sectors tracked by the PMI that showed growth.