How Good is Building Permits as an Economic Indicator?

By Advisorymandi
25-June-2018 8:52:37 AM
How Good is Building Permits as an Economic Indicator?

When it comes to viable and most crucial indicators, most investors and traders used to monitor GDP, non-farm payrolls, unemployment data, WPI, CPI, and many others which considered as major economic indicators. But, the truth is there are other leading economic indicators like core retail sales, industrial production, and building permits which usually considered as a meaningless piece of information despite its importance in economic sectors. And the one which we are going to discuss is Building Permits.


It is one of the 11 datasets incorporating the composite index of leading economic indicators. It is more like an authorization that can only granted by an authoritative body like government and regulatory body before the construction of any new or existing building legally occur. Generally, the housing market is seen as one of the first economic sectors which rise or fall by any movement in the economic conditions. And the “building permits” is the early economic indicator of any activity in the housing market.


Not all but many investors, traders, and economists closely watched the monthly building permit report to go through all the important factors associated with the construction of a building. These are one of the important economic activities like employment and finance which give crucial information on the state of the economy in the future.


The best way to understand it is by going through different segments. For example, if there is an increase in commercial building permits then it often indicates the businesses are expanding and new companies are establishing. Similarly, if there is an increase in warehouses building permits then it is a sign of commerce sector rising in foreseeable future.

Building permits data for new housing units available on monthly, annually, and year-to-date intervals. When there is an increase in building permits then it might indicate a need for more homes. And the high building permits report for single-family shows that more people have accumulated enough financials to afford their own residences.


Final Thoughts: –
Since we told you earlier, the building permits data or report collected monthly and annually basis. So, it is important to be aware of figures. It may not seem significant but building permits are one of the leading indicators which any investor and trader can also go through is an economic calendar where you can find all the important information which allow investors and traders to make informed decisions regarding their investments.

So, one thing is clear. The building permits provide vital information as an economic calendar and can be used to go through the major announcements and important economic events which can put an impact on the stock market and stock market investments.

Nevertheless, if you have any query, don’t forget to mention in the comment section below.


Note: All information & data provided in this article is for the educational purpose as well as to give general information on the finance & economy, not to provide any professional advice or service. Views & opinions are not biased against the company and do not affect any official policy or any other agency, an organization within the content.

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Author: Advisorymandi

AdvisoryMandi is India's most trusted Stock Market Advisory marketplace covers NSE, BSE, MCX & NCDEX. Invest with confidence and harness the power of AdvisoryMandi to make smarter investment decisions in Stocks, Indices, Commodities, Forex & IPO.

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