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.