Electrical Marketing’s Key Economic Indicators - May 25, 2012

New McGraw-Hill construction index shows growth. McGraw-Hill Construction recently launched the Dodge Momentum Index, a 12-month leading indicator of construction spending for nonresidential building. Based on a 91% correlation between construction planning reports published by Dodge and Commerce Department’s data on construction spending over the past 10 years, the index is intended to be an early and accurate leading indicator of future construction spending.

Since reaching bottom in July 2011 at a level of 77.1 (2000=100), the index has trended up in all but two months. In April 2012, the Dodge Momentum Index climbed one point from the previous month to reach a level of 94.7. According to Robert Murray, V.P. of economic affairs for McGraw-Hill Construction, “The relatively steady movement upward since the middle of last year suggests that construction spending put in place for nonresidential buildings should begin to move in a more consistently positive direction during the second half of 2012.”

ABI slips in April. After five months of positive readings, the Architecture Billings Index (ABI) fell last month. Published by the American Institute of Architects (AIA), the ABI reflects the approximate nine- to twelve-month lag time between architecture billings and construction spending. The April ABI score was 48.4, following a mark of 50.4 in March. The new projects inquiry index was 54.4, down from a mark of 56.6 the previous month.

“Considering the continued volatility in the overall economy, this decline in demand for design services isn’t terribly surprising,” said Kermit Baker, AIA’s chief economist. “Also, favorable conditions during the winter months may have accelerated design billings, producing a pause in projects that have moved ahead faster than expected.”

Leading economic indicators drop slightly in April. The Conference Board’s Leading Economic Index (LEI) for the U.S. declined 0.1 percent in April to 95.5, following a 0.3% increase in March, and a 0.7% increase in February. Said Ken Goldstein, a Conference Board economist, “The indicators reflect an economy still struggling to gain momentum. Growth is slow and choppy, and consumers, executives and investors are looking for more progress.”