Industry Outlook

ABI Slows But Remains Positive

Architecture firm billings growth slowed in September but remained positive for the Architecture firm billings growth slowed in 12th consecutive month, according to a new report from the American Institute of Architects (AIA).

AlA’s Architecture Billings Index (ABI) score for September was 51.1 compared to 54.2 in August. However, continued strength in new projects coming into architecture firms points to billings growth in the coming months.

“Similar to the strong conditions we’ve seen nationally, architecture firms located in the Midwest and Southern regions of the country continued to report very strong billings in September,” says AIA chief economist Kermit Baker. “However, billings were soft at firms located in the Northeast again, where they have declined or been flat for the entire year so far.”

Dodge Momentum Index Declines in December

The Dodge Momentum Index moved 4.2 percent lower in October to 150.5 (the year 2000=100) from the revised September reading of 157.0. The momentum index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year.

October’s shortfall was the third consecutive monthly decline and the result of losses in both components of the index. The commercial component fell by 4.9 percent from September to October. The commercial component has, in fact, been the impetus behind the recent string of declines in the overall index. This is consistent with the view that the commercial building sector is approaching a peak and should begin to gradually ease back over the coming year.

New construction starts in N September fell 5 percent from the previous month to a seasonally adjusted annual rate of $709.6 billion. according to Dodge Data & Analytics. The September downturn followed 9-percent declines in both July and August. as the pace of construction starts has now pulled back for the third month in a row after reaching the current year‘s high in June.

By major sector, nonresidential building weakened further in September, sliding 6 percent.

Through the first nine months of 2018. total construction starts on an unadjusted basis were $599.9 billion, down 1 percent from the same period a year ago. The year-to-date volume for total construction starts was dampened by a 49-percent plunge for the electric utility/gas plant category. If the electric utility/gas plant category is excluded. total construction starts during the first nine months of 2018 would be up 1 percent compared to the same period last year.

Nonresidential building in September was $236.4 billion (annual rate), down 6 percent. The commercial building categories as a group fell 13 percent, retreating for the third month in a row after the robust volume back in June.

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