Design Billings Increasing Entering Height of Construction Season

After beginning the year with a marginal decline, the Architecture Billings Index (ABI) has posted three consecutive months of growth in design revenue at architecture firms. As a leading economic indicator of construction activity, the ABI reflects the approximate nine- to 12-month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the April ABI score was 50.9, down from a score of 54.3 in the previous month. This score still reflects an increase in design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 60.2, up from a reading of 59.8 the previous month, while the new design contracts index increased from 52.3 to 53.2.

“Probably even better news for the construction outlook is that new project work coming into architecture firms has seen exceptionally strong growth so far this year,” said AIA Chief Economist Kermit Baker, Hon. AIA, PhD. “In fact, new project activity has pushed up project backlogs at architecture firm to their highest level since the design
 market began its recovery earlier this decade.”  

Key April ABI highlights include:

  • Regional averages: South (55.3), Midwest (53.3), West (50.9), Northeast (50.7)
  • Sector index breakdown: institutional (54.0), mixed practice (53.4), commercial/industrial (52.4), multi-family residential (49.9)
  • Project inquiries index: 60.2
  • Design contracts index: 53.2
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    The regional and sector categories are calculated as a 3-month moving average, whereas the national index, design contracts and inquiries are monthly numbers.
     

     

    Architecture Billings Index Moves Into Negative Territory

    The Architecture Billings Index (ABI) dipped slightly into negative territory in January, after a strong showing in December. As an economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the January ABI score was 49.5, down from a score of 55.6 in the previous month. This score reflects a minor decrease in design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 60, up from a reading of 57.6 the previous month.

    “This decrease in activity, taking into consideration strong readings in project inquiries and new design contracts, isn’t exactly a cause for concern,” says AIA Chief Economist, Kermit Baker, Hon. AIA, PhD. “The fundamentals of a sound nonresidential design and construction market persist.”

    Key January ABI highlights:

    • Regional averages: South (54.2), Northeast (53), Midwest (52.4), West (48.8)
    • Sector index breakdown: institutional (54.6), commercial / industrial (53.4), mixed practice (48.1), multi-family residential (48.1)
    • Project inquiries index: 60
    • Design contracts index: 52.1

    Architecture Billings Index Concludes Year With Positive Growth

    The Architecture Billings Index (ABI) concluded the year in positive terrain, with the December reading capping off three straight months of growth in design billings. As an economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the December ABI score was 55.9, up sharply from 50.6 in the previous month. This score reflects the largest increase in design services in 2016 (any score above 50 indicates an increase in billings). The new projects inquiry index was 57.2, down from a reading of 59.5 the previous month.

    “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”,” says AIA Chief Economist, Kermit Baker, Hon. AIA, PhD. “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

     
    The regional and sector categories are calculated as a 3-month moving average, whereas the national index, design contracts and inquiries are monthly numbers.

    ABI Reports Increase in Design Services Demand

    After seeing consecutive months of contracting demand for the first time in four years, the Architecture Billings Index (ABI) saw a modest increase demand for design services.  As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the October ABI score was 50.8, up from the mark of 48.4 in the previous month. This score reflects a slight increase in design services (any score above 50 indicates an increase in billings).  The new projects inquiry index was 55.4, down from a reading of 59.4 the previous month.

    “There was a collective sense of uncertainty throughout the design and construction industry leading up to the presidential election,” says 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.”

    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

    The regional and sector categories are calculated as a 3-month moving average, whereas the national index, design contracts and inquiries are monthly numbers.

    ABI Posts Decline in Demand for Design Services

    The Architecture Billings Index (ABI) posted consecutive months of a decline in demand for design services.  As an economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the September ABI score was 48.4, down from the mark of 49.7 in the previous month. This score reflects a decrease in design services (any score above 50 indicates an increase in billings).  The new projects inquiry index was 59.4, down from a reading of 61.8 the previous month.

    “This recent backslide should act as a warning signal,” states AIA Chief Economist, Kermit Baker, Hon. AIA, PhD.  “But this drop-off in demand could be continued hesitancy in the marketplace to move forward on projects until the presidential election is decided. The fact that new work coming into architecture continues to slowly increase suggests that billings will resume their growth in the coming months.”

    Key September ABI highlights

    • Regional averages: South (53.4), Midwest (50.1), West (49.5), Northeast (44)
    • Sector index breakdown: commercial/industrial (50.4), mixed practice (49.8), institutional (49), multi-family residential (48.8)
    • Project inquiries index: 59.4
    • Design contracts index: 51.4

    The regional and sector categories are calculated as a 3-month moving average, whereas the national index, design contracts and inquiries are monthly numbers.

    Architecture Billings Index Falls Below Positive Mark

    On the heels of six out of seven months of increasing levels of demand for design services, the Architecture Billings Index (ABI) fell just below the positive mark. As an economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the August ABI score was 49.7, down from the mark of 51.5 in the previous month. This score reflects a decrease in design services (any score above 50 indicates an increase in billings).  The new projects inquiry index was 61.8, up from a reading of 57.5 the previous month.

    “This is only the second month this year where demand for architectural services has declined and it is only by a fraction of a point,” said AIA Chief Economist, Kermit Baker, Hon. AIA, PhD.  “Given the solid numbers for new design contracts and project inquiries, it doesn’t appear that this is the beginning of a broader downturn in the design and construction industry.”

    Key August ABI highlights:

    • Regional averages: South (55.2), Midwest (52.8), West (49.0), Northeast (44.9)
    • Sector index breakdown: mixed practice (51.8), multi-family residential (50.9), commercial / industrial (50.8), institutional (50.7)
    • Project inquiries index: 61.8
    • Design contracts index: 52.7

    Architecture Billings Index Remains Positive as Demand for All Project Types Continues to Increase

    The Architecture Billings Index (ABI) was positive in July for the sixth consecutive month, and tenth out of the last twelve months as demand across all project types continued to increase.  As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the July ABI score was 51.5, down from the mark of 52.6 in the previous month. This score still reflects an increase in design services (any score above 50 indicates an increase in billings).  The new projects inquiry index was 57.5, down from a reading of 58.6 the previous month.

    “The uncertainty surrounding the presidential election is causing some funding decisions regarding larger construction projects to be delayed or put on hold for the time being,” said AIA Chief Economist, Kermit Baker, Hon. AIA, PhD.  “It’s likely that these concerns will persist up until the election, and therefore we would expect higher levels of volatility in the design and construction sector in the months ahead.”

    Key July Architecture Billings Index highlights:
    Regional averages: South (56.9), Midwest (50.1), Northeast (49.3), West (49.2)
    Sector index breakdown: multi-family residential (55.2), institutional (50.7), mixed practice (50.5), commercial/industrial (50.3)
    Project inquiries index: 57.5
    Design contracts index: 51.8

    The regional and sector categories are calculated as a three month moving average, whereas the national index, design contracts and inquiries are monthly numbers.

    Architecture Billings Index Shows Healthy Demand for All Building Types

    Led by an active multi-family housing market and sustained by solid levels of demand for new commercial and retail properties, the Architecture Billings Index shows healthy demand for all building types due to its highest score in nearly a year. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the May ABI score was 53.1, up sharply from the mark of 50.6 in the previous month. This score reflects an increase in design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 60.1, up from a reading of 56.9 the previous month.

    “Business conditions at design firms have hovered around the break-even rate for the better part of this year,” said AIA Chief Economist, Kermit Baker, Hon. AIA, PhD. “Demand levels are solid across the board for all project types at the moment. Of particular note, the recent surge in design activity for institutional projects could be a harbinger of a new round of growth in the broader construction industry in the months ahead.”

    Key May ABI highlights:
    •Regional averages: West (53.8), South (53.7), Northeast (51.2), Midwest (49.9)
    •Sector index breakdown: multi-family residential (53.7), institutional (53.0), commercial/industrial (51.0), mixed practice (51.0),
    •Project inquiries index: 60.1
    •Design contracts index: 52.8

    The regional and sector categories are calculated as a 3-month moving average, whereas the national index, design contracts and inquiries are monthly numbers.

    About the AIA Architecture Billings Index
    The Architecture Billings Index (ABI), produced by the AIA Economics & Market Research Group, is a leading economic indicator that provides an approximately nine to twelve month glimpse into the future of nonresidential construction spending activity. The diffusion indexes contained in the full report are derived from a monthly “Work-on-the-Boards” survey that is sent to a panel of AIA member-owned firms. Participants are asked whether their billings increased, decreased, or stayed the same in the month that just ended as compared to the prior month, and the results are then compiled into the ABI. These monthly results are also seasonally adjusted to allow for comparison to prior months. The monthly ABI index scores are centered around 50, with scores above 50 indicating an aggregate increase in billings, and scores below 50 indicating a decline. The regional and sector data are formulated using a three-month moving average. More information on the ABI and the analysis of its relationship to construction activity can be found in the recently released White Paper, Designing the Construction Future: Reviewing the Performance and Extending the Applications of the AIA’s Architecture Billings Index on the AIA web site.

    Architecture Billings Index: Mostly Stable Conditions in Nonresidential Design and Construction Markets

    Following a generally positive performance in 2015, the Architecture Billings Index has begun this year modestly dipping back into negative terrain. As an economic indicator of construction activity, the ABI reflects the approximate nine- to 12-month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the January ABI score was 49.6, down slightly from the mark of 51.3 in the previous month. This score reflects a minor decrease in design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 55.3, down from a reading of 60.5 the previous month.

    Every January the AIA research department updates the seasonal factors used to calculate the ABI, resulting in a revision of recent ABI values.

    “The fundamentals are mostly sound in the nonresidential design and construction market,” says AIA Chief Economist, Kermit Baker, Hon. AIA, PhD. “January was a rocky month throughout the economy, with falling oil prices, international economic concerns, and with steep declines in stock market valuations in the U.S. and elsewhere. Some of the fallout of this uncertainty may have affected progress on design projects.”

    Key January ABI highlights:

    • Regional averages: West (50.8), Northeast (50.4), South (50.3), Midwest (48.9)
    • Sector index breakdown: multi-family residential (51.9), commercial/industrial (50.5), institutional (49.9), mixed practice (49.0)
    • Project inquiries index: 55.3
    • Design contracts index: 50.9

    The regional and sector categories are calculated as a three-month moving average, whereas the national index, design contracts and inquiries are monthly numbers.

    Architecture Billings Index: Positive Outlook for Construction Industry

    There were a few occasions where demand for design services decreased from a month-to-month basis in 2015, but the Architecture Billings Index (ABI) concluded the year in positive terrain and was so in eight of the 12 months of the year. As an economic indicator of construction activity, the ABI reflects the approximate nine- to 12-month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the December ABI score was 50.9, up from the mark of 49.3 in the previous month. This score reflects a slight increase in design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 60.2, up from a reading of 58.6 the previous month.

    “As has been the case for the past several years, there continues to be a mix of business conditions that architecture firms are experiencing,” says AIA Chief Economist Kermit Baker, Hon. AIA, PhD. “Overall, however, ABI scores for 2015 averaged just below the strong showing in 2014, which points to another healthy year for construction this year.”

    Key December ABI highlights:

    • Regional averages: West (53.7), South (53.3), Northeast (46.7), Midwest (46.1),
    • Sector index breakdown: multi-family residential (52.9), institutional (52.2), commercial/industrial (47.3), mixed practice (46.5)
    • Project inquiries index: 60.2
    • Design contracts index: 51.0

    The regional and sector categories are calculated as a three-month moving average, whereas the national index, design contracts and inquiries are monthly numbers.