Electrical Marketing’s Leading Indicators

Many leading economic indicators are getting unmistakably better, but not all economists agree that the recession is over. They do seem to agree that it will be a slow recovery at best. Although business conditions in the electrical industry tend to lag the overall U.S. economy, it might be reasonable to expect business in the overall electrical market to start improving by mid-2010.

Purchasing Managers Index cracks 50-point barrier in August. Purchasing managers said economic activity in the manufacturing sector expanded in August, following 18 consecutive months of contraction, and that the overall economy grew, according to the latest Manufacturing ISM Report On Business published by the Institute for Supply Management, Tempe, Ariz. Said Norbert J. Ore, chair of the Institute’s Supply Management Manufacturing Business Survey Committee, “The August index of 52.9 percent is the highest since June 2007. The growth appears sustainable in the short term, as inventories have been reduced for 40 consecutive months and supply chains will have to re-stock to meet this new demand.”

Building permits up for fifth consecutive month in August. Privately-owned housing units authorized by building permits in August were at a seasonally adjusted annual rate of 579,000, 2.7 percent above the revised July rate of 564,000, but 32.4 percent below the August 2008 estimate of 857,000. Single-family permits actually dipped in August (-0.2%). Leading the regions was the East with an 18.1% increase in total building permits. The South saw a 7.2% increase over July, while the Midwest (-5.7%) and the West (-5.6%) lagged.

Leading Indicators looking good again. The Conference Board’s Leading Economic Index (LEI)increased 0.6 percent in August, following a 0.9 percent gain in July, and a 0.8 percent rise in June. “The LEI has risen for five consecutive months and the coincident economic index has stopped falling,” said Ken Goldstein, an economist at The Conference Board, “Taken together, this suggests that the recession is

bottoming out. These numbers are consistent with the view that after a very severe downturn, a recovery is very near. But, the intensity and pattern of that recovery is more uncertain.”