By: Kendall Jones on September 21st, 2016
Architecture Billings Decrease for Only the Second Time in 2016
For only the second month this year, the Architecture Billings Index (ABI) dropped below a score of 50, indicating a decrease in design services in August. August’s score of 49.7 ended a six-month streak of increasing design activity and closely resembles January’s score of 49.6. While July’s score of 51.5 had dropped lower than the score in June, it remained above 50. (Scores above 50 indicate an increase in billings and scores below 50 indicate a decrease.) The ABI acts as a barometer for future nonresidential construction spending and activity with the average lead time between billings and construction spending typically running around nine months to a year.
The new projects inquiry index for August took a nice jump from 57.5 in July to 61.8. The design contracts index remained above 50 and saw a decent increase from 51.8 in July to 52.7 in August.
ConstructConnect Chief Economist Alex Carrick doesn't see any cause for alarm with the slight decrease in billings in August. “The mild pullback in the ABI index is in keeping with a construction sector that has been hovering in a holding pattern. The sizable jump in the new projects inquiry index, to 61.8 in August from 57.5 in July, provides much better news and suggests that owners aren’t becoming totally sidetracked by the question of whether or not the Federal Reserve is about to institute another small hike in interest rates,” noted Carrick.
The South and Midwest regions continue to be the bright spots while the Northeast and West regions struggle. The three-month regional average for the South was at 55.2 and the Midwest scored a 52.8. The West had a small drop from 49.2 in July to 49.0 in August. The Northeast was the big loser falling from 49.3 to 44.9 in August. The Northeast had a stretch of months where it looked like things were headed in the right direction, but the last two months show a clear decrease in billings.
All four sectors remained in positive territory again in August. Mixed Practice had the highest score last month, rising from 50.5 to 51.8 in August. Multi-family Residential dropped a few points from 55.2 to 50.9 but managed to stay above 50. The Institutional remained at 50.7 again in August. Commercial/Industrial climbed half a point from 50.3 to 50.8 in August.
About Kendall Jones
Kendall Jones is the Editor in Chief at ConstructConnect. He has been writing about the construction industry for years, covering a wide range of topics from safety and technology to industry news and operating insights.