by Bill McBride on 5/18/2016 09:39:00 AM
Wednesday, May 18, 2016
Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment.
From the AIA: Architecture Billings Index Shows Continued Modest Growth
After beginning the year with a decline, the Architecture Billings Index has posted three consecutive months of increasing demand for design activity at architecture firms. 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 April ABI score was 50.6, down from the mark of 51.9 in the previous month. This score still reflects an increase in design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 56.9, down from a reading of 58.1 the previous month.Click on graph for larger image.
“Architects continue to report a wide range of business conditions, with unusually high variation in design activity across the major building categories,” said AIA Chief Economist, Kermit Baker, Hon. AIA, PhD. “The strong growth in design contracts – the strongest score for this indicator since last summer -- certainly suggests that firms will be reporting growth in billings over the next several months.”
• Regional averages: South (52.2), Northeast (51.5), West (50.8), Midwest (50.8)
• Sector index breakdown: multi-family residential (53.7), commercial / industrial (52.0), mixed practice (50.0), institutional (49.0)
This graph shows the Architecture Billings Index since 1996. The index was at 50.6 in April, down from 51.9 in March. Anything above 50 indicates expansion in demand for architects' services.
Note: This includes commercial and industrial facilities like hotels and office buildings, multi-family residential, as well as schools, hospitals and other institutions.
The multi-family residential market was negative for most of 2015 - suggesting a slowdown or less growth for apartments - but has turned around and been positive for the last seven months - so there might be another pickup in multi-family starts.
According to the AIA, there is an "approximate nine to twelve month lag time between architecture billings and construction spending" on non-residential construction. This index was positive in 9 of the last 12 months, suggesting a further increase in CRE investment in 2016.
Posted by Bill McBride on 5/18/2016 09:39:00 AM