December's Architecture Billings Finishes the Year Strong
The Architecture Billings Index (ABI) finished off the year with its third consecutive month of growth for demand in design services. December’s score of 52.9, down a bit from November’s score of 55.0, means that there was growth in design billings in 10 of the 12 months in 2017.
This is a strong indicator that 2018 should be a robust year for construction activity and spending. The average lead time between architecture billings and construction spending is usually between nine to twelve months. For the ABI, scores above 50 indicate an increase in billings, while scores below 50 indicate a decrease.
The new projects inquiry index for December increased from 61.1 to 61.9. The new design contracts index increased was 52.7, down a bit from November’s score of 53.2. Like the ABI, these two scores were strong throughout most of 2018.
With the exception of the Northeast, all regions reported growth for design billings in December. The South continued its upward trend, increasing from 52.8 in November to 56.3 to finish out the year. The West dropped from 54.8 to 53.0, but remained well above the 50-point threshold for growth. The Midwest had another solid increase, going from 50.4 to 52.9 in December. The Northeast has seen its growth slowing over the past couple of months and dropped from 52.8 to 49.4 in December, indicating a decrease in design billings.
All sectors of construction showed increased demand for design services in December. Multi-Family Residential again led all sectors, climbing from 53.9 in November to 55.4. Commercial/Industrial edged up from 53.3 to 54.8 in December. Institutional saw a slight decrease from 52.4 to 51.2. Mixed Practice barely managed to stay in positive territory with a score of 50.4, down from the 53.6 in the previous month.
Based on the strong ABI scores in 2017, there should be some positive momentum for construction as these projects start to get underway in 2018.