Wednesday, November 14, 2018

AIA: "Architecture firm billings continue to slow, but remain positive in October"

by Bill McBride on 11/14/2018 03:11:00 PM

Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment.

From the AIA: Architecture firm billings continue to slow, but remain positive in October

Architecture firm billings growth softened in October but remained positive for the thirteenth consecutive month, according to a new report today from The American Institute of Architects (AIA).

AIA’s Architecture Billings Index (ABI) score for October was 50.4 compared to 51.1 in September. With continued strength in new project inquiries, billings are expected to remain steady into the coming months.

"The effects of the 2018 hurricane season are the probable cause of the temporary contraction in billings in the Southern region,” said AIA Chief Economist Kermit Baker, Hon. AIA, PhD. “This decrease in demand for design services is limited, and the region should rebound over the next several months."
...
• Regional averages: Midwest (57.8), Northeast (51.8), South (48.4), West (46.9)

• Sector index breakdown: mixed practice (52.7), multi-family residential (52.3), institutional (52.0), commercial/industrial (48.9)
emphasis added
AIA Architecture Billing Index Click on graph for larger image.

This graph shows the Architecture Billings Index since 1996. The index was at 50.4 in October, down from 51.1 in October. 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 has been positive for 12 consecutive months, suggesting a further increase in CRE investment into 2019.