When the AIA said the Architecture Billings Index (ABI) was honing in on a positive note to end the year, most people believed them. The ABI had been on an upward trend two months prior and December’s continuation of this wasn’t all that unthinkable.
A December score of 55.9 to cap the year off was up from November’s (also positive) score of 50.6 and marked the third positive score in a row off the back off a two-month slump before hand. December’s score for the ABI indicates the largest increase in design services in 2016. Though project enquiries came down from 59.5 to 57.2, design contracts rose to 51.2 from 50.2.
The ABI is the leading economic indicator of construction activity. It 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.
“The sharp upturn in design activity as we wind down the year is certainly encouraging. This bodes well for the design and construction sector as we enter the new year”,” said AIA Chief Economist, Kermit Baker, Hon. AIA, PhD in a press release. “However, December is an atypical month for interpreting trends, so the coming months will tell us a lot more about conditions that the industry is likely to see in 2017.”
Key December ABI highlights:
- Regional averages: Midwest (54.4), Northeast (54.0), South (53.8), West (48.8)
- Sector index breakdown: commercial / industrial (54.3), institutional (53.3), mixed practice (51.9), multi-family residential (50.6)
- Project inquiries index: 57.2
- Design contracts index: 51.2