Industry Outlook November 2021

The Architecture Billings Index Stays Positive in September

Architecture firms continued to report increasing demand for design services in September, according to a new report from The American Institute of Architects (AIA). The Architecture Billings Index (ABI) score for September was 56.6, which is up from August’s score of 55.6. Any score above 50 indicates an increase in billings from the prior month. During September, scoring for both the new project inquiries and design contracts moderated slightly but remained in positive territory, posting scores of 61.8 and 54.7, respectively.

Dodge Momentum Index Recovers in September

The Dodge Momentum Index gained 11% in September to 164.9 (2000=100) from the revised August reading of 148.0. The Momentum Index, issued by Dodge Construction Network, is a monthly measure of the initial report for nonresidential building projects in planning, which has been shown to lead construction spending for nonresidential buildings by a full year. The commercial planning component increased by 13% in September, while the institutional component rose 8%.

Nonresidential building projects entering planning staged a solid recovery in early 2021. At the start of summer, those gains turned to losses as higher material prices and shortages of labor and goods weighed on the construction sector. The strength in projects entering planning was widespread during the month, with most sectors moving higher, excluding healthcare. Year-over-year, the Momentum Index was 30% higher than September 2020; the commercial component was up 32%, while institutional planning was 25% higher.

Total Construction Starts Rebound in September

Total construction starts rose 10% in September to a seasonally adjusted annual rate of $889.7 billion, according to Dodge Construction Network. All three sectors improved: nonresidential building starts rose 15%, residential starts moved 9% higher, and nonbuilding starts increased by 6%.

Nonresidential building starts rebounded in September, gaining 15% to a seasonally adjusted annual rate of $281.8 billion. Commercial buildings rose 13% as starts improved for the hotel, warehouse, and retail sectors. Office building starts fell. Institutional building starts rose 13% with all sectors but public buildings improving over the month. Manufacturing starts jumped 47% following a particularly weak August. In the first nine months of 2021, nonresidential building starts were 7% higher. Commercial starts increased 8%, manufacturing starts were 38% higher, while institutional starts were up just 2%.

For the 12 months ending in September 2021, nonresidential building starts were 1% lower than in the 12 months ending in September 2020. Commercial starts were down 1%, institutional starts rose 1% and manufacturing starts dropped 12% in the 12 months ending September 2021. Regionally, total construction starts improved in all five regions during September.

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