Architecture Billings Get Back on Track in October
The Architecture Billings Index (ABI) got back on track in October with a score of 51.7 to reflect an increase in billings after a slight bump in the road the previous month. September’s score of 49.1 was the first time demand for design services had contracted since January 2017. For the ABI, scores above 50 indicate an increase in billings, while scores below 50 indicate a decrease.
October’s increase in design services from architecture firms, combined with the performance from the rest of the year, is a positive sign for the construction industry heading into next year. The Architecture Billings Index (ABI) is a leading indicator of future nonresidential construction activity. The average lead time between architecture billings and construction spending is usually between nine months to a year.
The new projects inquiry index for October increased to 60.2 after a solid score of 59.0 in September. The new design contracts index also improved from 52.0 to 52.8 in October.
The regional averages for demand for design services were more of a mixed bag in October. The Northeast and South regions both reported increases, while the Midwest and West both reflected a decrease in demand for design activity.
The Northeast dropped a bit from 56.9 in September to 54.0 in October. The South managed to stay just above the 50-mark with a score of 50.8, which was also down from the 54 it posted the previous month. The Midwest dropped from 50.4 to 49.0 in October. The West saw some improvement from September’s score of 48.8 but fell just short of getting back into positive territory with a score of 49.8.
All sectors remained in positive territory again in October. Commercial/Industrial led all sectors with a 51.2, which was down from a score of 54.0 last month. The Institutional, Mixed Practice and Multi-Family Residential sectors all reported a score of 50.7 in October. In September, Mixed Practice had a score of 52.2, while both Institutional and Multi-Family Residential were at 51.0 the previous month.
ConstructConnect Chief Economist Alex Carrick provided his take on the latest ABI report:
"The major takeaways from the AIA’s latest ABI data release are: (1) design activity nationwide remains healthy, if not quite outstanding; (2) perhaps there’s reason for even more excitement due to the strength in the new projects inquiry index; (3) the East is experiencing slightly better conditions than the West; and (4) there is good balance between type-of-structure categories.
"The latest employment data from the Bureau of Labor Statistics also suggest that onsite construction activity will continue to forge ahead. Whereas the year-over-year increase in the total number of jobs in the U.S. is +1.4%, it is a much faster +3.5% with architectural and engineering firms. The harder the design profession is working on assembly instructions, the better are the prospects for fieldwork eventually taking place."