January's Architecture Billings Starts 2018 Strong
The Architecture Billings Index (ABI) kicked off 2018 with a score of 54.7. This is up from December’s revised score of 52.8, marking the fourth consecutive month that there has been an increase in demand for design services. The ABI is a leading indicator of future construction activity with 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 fact that the ABI increased in January is a good sign that billings and, by extension, construction spending will be strong in 2018. Often there is a decline in design activity in January. The new projects inquiry index for January was 61.1, down from December’s revised score of 62.0. The new design contracts index increased from 53.4 to 53.9 in January.
Regional averages remained strong in January with the exception of the Northeast, which contracted again last month. The West had the highest score in January with a 56.2 after posting a score of 52.9 in December. The South continues to remain a strong area for design services with a score of 55.3. The Midwest also continues to see growth in demand for design activity with a score of 54.8. As we previously mentioned, the Northeast fell again in January to a score of 47.3.
Looking at the sector averages, demand for design services showed growth across the board in January. Multi-Family Residential saw a nice increase in January, climbing from 55.4 in December to 56.0. Commercial/Industrial had a solid score of 53.3 for its three-month average in January. Institutional saw a nice increase from 51.2 to 52.5 in January. Mixed Practice had the lowest score of the four sectors but still showed growth with a score of 50.1 last month.