Economy

ABI Indicates Continued Growth in Construction Sector

August 18, 2016

The July Architecture Billings Index indicated that design activity for construction projects remains healthy although growing at a slower pace than the past two months. The ABI was at 51.5 in July, just above the average score for the first half of 2016 and down slightly from June’s score of 52.6.

New design contracts rebounded from a surprising negative score of 49.7 in June to a score of 51.8. New project inquiries slowed their pace of growth from June.

The South had the strongest increase in billings, pushing its score to 56.9. The Midwest was mostly unchanged at 50.1 while the Northeast and West declined to 49.3 and 49.2, respectively.

In a special question, respondents were asked if there has been a direct impact on any of their projects due to the presidential election, five percent of firms said yes, 20 percent said that it may have affected client plans and decisions, and the remaining 75 percent said that no impact had resulted.

When asked if the upcoming presidential election would be positive or negative for the design professions for the remainder of 2016. The response indicated architecture firms were nervous about the impact of the election with 25 percent feeling it would be negative, 33 percent mixed and one third unsure of the effect.

Surveyed firms commented:

“Stable domestically. Big slowdowns internationally due to funding concerns and civil unrest.” —170-person firm in the Midwest, institutional specialization
“Inquiries, concept studies, and other front-end work is still happening at a high and steady pace, though we are starting to see fewer proposal requests for full services.” —27-person firm in the South, residential specialization
“High construction costs are having an impact on scope and systems, but projects are finding a way to move forward.” —11-person firm in the Northeast, commercial/industrial specialization
“Booming. Shortages in skilled trades. Shortages in materials. Quality control increasingly difficult. All current clients are self-funded.” —2-person firm in the South, commercial/industrial specialization

About the AIA Architecture Billings Index

The Architecture Billings Index (ABI) is considered a leading economic indicator of construction activity, and reflects the approximate nine to twelve month lead time between architecture billings and construction spending. The regional and sector categories are calculated as a 3-month moving average, whereas the national index, design contracts and inquiries are monthly numbers. The monthly ABI index scores are centered around the neutral mark of 50, with scores above 50 indicating growth in billings and scores below 50 indicating a decline.

Below is a graph showing the history of the AIA Architecture Billings Index and Inquiries Index. You will need to view the graph on our website to use it’s interactive features, you can do so by clicking here. If you need assistance with either logging in or navigating the website, please contact our office at 800-432-3475 or info@SteelMarketUpdate.com.