ABI

Back with a bang: Architecture Billings Index rebounds after a two month dip

Architecture National
Billings (Blue), Inquiries (Red) and Design Contracts (Green) for the past 14 months. (Courtesy AN)
Billings (Blue), Inquiries (Red) and Design Contracts (Green) for the past 14 months. (Courtesy AN)

After a two-month slump, the Architecture Billings Index (ABI) has come back with a vengeance, storming to a score of 50.8 in October. In the months prior, the American Institute of Architects (AIA) reported scores of 49.7 and 48.4 (for August and September respectively). While this may be good news on a national scale, the only region to report positive figures was the South—an area which hasn’t seen a dip in billings growth since June 2012.

regional to use

Billings by region: Northeast (Orange), Midwest (Blue), South (Red) and West (Green) for the past 14 months. (Courtesy AN)

The ABI, the leading economic indicator of construction activity, reflects a 9 to 12 month lead time between architecture billings and construction spending. The national index, design contracts, and inquiries are calculated monthly, while the regional and sector categories are calculated as a three-month moving average. The index runs on a scale from 0-100 and scores above 50 suggest growth while anything below implies negativity in the market.

While numbers for inquiries remained typically strong (the last figure below a score of 50 was in July 2009 in the aftermath of the recession), design contract figures dropped into the negative after a three-month streak. Billings for “Residential” typologies were also the only sector to post positive scores for the month too. Institutional and Mixed Practice remained negative from the previous month meanwhile, Commercial/Industrial figures dropped from a score of 50.4 to 49.8.
Sectors to use

Billings by sector: Residential (Orange), Commercial/Industrial (Blue), Institutional (Red) and Mixed Use (Green) for the past 14 months. (Courtesy AN)

“There was a collective sense of uncertainty throughout the design and construction industry leading up to the presidential election,” said AIA Chief Economist, Kermit Baker, Hon. AIA, PhD. “Hopefully we’ll get a sense of what direction we will be headed once we get a clearer read on how the new administration’s policies might impact the overall economy as well as the construction industry.”

Key October ABI highlights:

  • Regional averages: South (53.7), West (49.7), Northeast (47.3) Midwest (46.8)
  • Sector index breakdown: Multi-family residential (51.2), Commercial/Industrial (49.8), Mixed Practice (49.5), Institutional (49.1)
  • Project inquiries index: 55.4
  • Design contracts index: 48.7

Due to small sample sizes, the regional and sector categories are calculated as a 3-month moving average. On the other hand, for the national index, design contracts and inquiries are monthly figures.

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