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How the May Decline in Building Permits Affects the Economy

Ricky Cove
How the May Decline in Building Permits Affects the Economy

The Conference Board uses the number of building permits issued as one of the constituents of its LEI (Leading Economic Index) model. The reason for using building permits as a forward indicator is the time gap between the issuance of the permit and the start of construction (PKB) activity. An increasing number of permits is a strong signal for future activity in the housing sector, which has a positive impact on the economy.