Electrical market & construction forecasts

There is a real mix of indicators in these forecasts. The least-bullish of them is the Architecture Billings Index (ABI) published monthly by the American Institute of Architects (AIA) and Deltek, which surveys architects to predict nonresidential construction activity nine-to-twelve months out. This index is showing declining demand for architects’ services on both a month-over-month and year-over-year basis. For August, it stands at 47.2 points, which is under the 50-point mark indicating growth.

But for every sour statistical story in this month’s data, you can find some reasons to cheer. The National Electrical Manufacturers Association (NEMA) publishes its monthly ElectroIndustry Business Confidence Index (EBCI), a monthly survey of senior managers at electrical manufacturers. While the EBCI’s future conditions component was down in August on both a month-to-month and year-over-year basis, it’s still comfortably above the 50-point mark indicating improving business conditions.

Another positive indicator is the Dodge Momentum Index (DMI), a monthly measure of the value of nonresidential building projects entering the planning stage shown to lead construction spending for nonresidential buildings by a full year. It was up +20.8% in July.

Electrical pricing data

If you are freaked out by an Electrical Price Index EPI that’s currently riding quite a bit over its historical averages on a monthly (+0.2% monthly average) and annual (+2.6% annual average ), you can find reason for concern, Electrical Marketing’s Electrical Price Index’s continues to log large increases year-over-year pricing trends in many key categories, including building wire and power cable, panelboards, and switchboards.

The double-digit YOY increase in building wire and cable and the +7.1% increase in power cable in the EPI are due in part to the wild swings in the copper prices, which were up 42 cents per pound in early October over early September.

The Electrical Price Index is published each month by Electrical Marketing newsletter and is available as part of a $99 annual subscription. Go to www.electricalmarketing.com for details.

Employment data

While electrical contractor data was down fractionally in the most recent data, it’s still on a historic run by registering another month over 1 million employees. It hasn’t been below this mark since January 2022, according to data from the U.S. Bureau of Labor Statistics.

Electrical manufacturers’ orders and shipments

Shipments and new orders are both solidly in the green in July, with shipments up a healthy +4.2% YOY to $4,685 million and new orders up +3.3% to $4,628 million. They were both up comfortably in the YOY data, too. Electrical manufacturers have got to be reasonably pleased with these numbers.

Single-family housing construction

While the challenges homebuilders are facing with high interest rates, a smaller cohort of first-time home buyers because of demographic realities and issues with local building restrictions are well known, the latest housing start data swung down again in August with a -7% decline from July to 890,000. That’s also -11.7% below the August 2024 data.

Despite the slowdown in residential construction activity, building permits are still a reliable indicator of future residential and light-commercial building. Home builders typically don’t purchase building permits unless they are serious about breaking ground, and once new housing developments go in, light-commercial construction follows.

Summary

Although the 15 business indicators covered here paint a mixed picture for the electrical construction industry, the slow-but-steady scenario they sketch out to a large degree mirror the business conditions in the U.S. economy as a whole. If the U.S. economy is still growing at the +3.8% pace for national GDP (gross domestic product), it was through 2Q 2025, according to the U.S. Bureau of Economic Analysis, business conditions in the electrical market should remain tolerable. And if the U.S. Federal Reserve cuts the federal funds rate as expected over the next few months, lower rates could juice up construction lending and investment and cut residential mortgage rates, giving homebuilders and the contractors that work on their housing developments reason to cheer.