Wednesday, November 18, 2009
A New diffusion index created by MB Property Corporation indicates that economic recovery began in February 2009 and that business activity expanded in September and October 2009.
The IBI collects primary data from geographically diverse industrial facility customers representing a variety of “on the ground” business sectors—moving inventory through the global supply chain. The IBI consists of two indices: an overall business activity index and a distribution space utilization index. Index values above 50 represent expansion and values below 50 represent contraction.
"The intent of our study was to create an index that will monitor the health of the industrial property market and further enhance our customer relationships by increasing interaction and dialogue. The IBI has numerous advantages over other diffusion indices. Of key importance is the blend of insights and experience of both corporate contacts as well as 'on the ground' users who are moving inventory through the global supply chain," said David Twist, MB's vice president, research.
The October IBI measures 53.9 for overall business activity, up from 51.3 in September. October results indicate the highest reading in the business activity index since May 2008, and mark the second consecutive year-over-year increase.
The index also implies that container volume will continue improving and net industrial space absorption will be far less negative in the fourth quarter than earlier in the year. The trend also indicates positive net industrial absorption is expected in 2010.
The national industrial space utilization index was 47.5 in October and has been trending upward since March. This index implies that retailers are likely building inventories as retail space utilization continues to expand. According to the index, imports should continue growing, as indicated by recent monthly gains in business activity. With coastal hub markets leading the way, net absorption is expected to continue to improve in the coming quarters.
About the IBI
For more than two years, MB Property Corporation has collected data from a geographically-diverse set of industrial facility customers across a range of business sectors. The IBI consists of an overall business activity index and a distribution space utilization index, tabulated for MB's markets and industry groups. The indices have averaged more than 350 participants per month. The findings indicate that the IBI is highly correlated with, and a leading indicator of, key macroeconomic variables. Of greatest significance, the BI leads net industrial absorption by a quarter with a correlation of 97 percent, and sea borne container volumes by one month with a correlation of 85 percent.
Download the November IBI Report.
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