by Bill McBride on 11/16/2016 12:31:00 PM
Wednesday, November 16, 2016
Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment.
From the AIA: Architecture Billings Index rebounds after two down months
After seeing consecutive months of contracting demand for the first time in four years, the Architecture Billings Index (ABI) saw a modest increase demand for design services. 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 October ABI score was 50.8, up from the mark of 48.4 in the previous month. This score reflects a slight increase in design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 55.4, down sharply from a reading of 59.4 the previous month.Click on graph for larger image.
“There was a collective sense of uncertainty throughout the design and construction industry leading up to the presidential election,” said AIA Chief Economist, Kermit Baker, Hon. AIA, PhD. “Hopefully we’ll get a sense of what direction we will be headed once we get a clearer read on how the new administration’s policies might impact the overall economy as well as the construction industry.”
• Regional averages: South (53.7), West (49.7), Northeast (47.3) Midwest (46.8)
• Sector index breakdown: multi-family residential (51.2) commercial / industrial (49.8), mixed practice (49.5), institutional (49.1)
This graph shows the Architecture Billings Index since 1996. The index was at 50.8 in October, up from 48.4 in September. 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.
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 8 of the last 12 months, suggesting a further increase in CRE investment through mid-2017.
Posted by Bill McBride on 11/16/2016 12:31:00 PM