ABI Continues to Stay Positive

Architecture firm billings growth expanded in November by a healthy margin, according to a new report from the American Institute of Architects (AIA). AlA’s Architecture Billings Index (ABI) November score was 54.7 compared to 50.4 in October. With the strongest billings growth figure since last January and continued strength in new project inquiries and design contracts, billing closed in 2018 on a strong note.

“Despite some concerns about a potential economic downturn, architecture firms continue to report strong billings, inquiries and new design contracts,” says AIA chief  economist Kermit Baker. “For the coming year, concerns about the economy among architecture firm leaders tend to be balanced by their concerns about a lack of qualified employee prospects.”

At a seasonally adjusted annual rate of  $789.3 billion, new construction starts in November decreased 7 percent from October’s elevated amount, according to Dodge Data & Analytics. Most of the total construction decline in the latest month was the result of nonresidential building pulling back 15 percent after its 43-percent surge in October.

The other two major construction sectors witnessed slightly reduced activity in November, with residential building down 1 percent and nonbuilding construction down 2 percent.

During the January-November 2018 period, total construction starts on an unadjusted basis were $738.2 billion, up 1 percent from a year ago.

Nonresidential building in November was  $279.9 billion (annual rate). down 15 percent from October. The commercial categories as a  group climbed 14 percent in November, on top of the 47 percent increase that was reported  in October.

The Dodge Momentum Index moved 5.3-percent higher in November to  159.7 (the year 2000=100) from the revised October reading of 151.7. 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.

November’s gain was due to a  9.4-percent rebound for the commercial component of the momentum index. The recent setbacks in  the overall index were the result of declines in planning for commercial buildings, and while such planning did rebound in November, the level remains below what was reported in late spring and early summer.  This is consistent with the view that  the commercial building sector may now be nearing a peak.

Meanwhile, the institutional component of the momentum index eased back 0.6 percent in November. Plans for institutional building  projects have remained generally stable during 2018, reflecting the influence of public funding as it relates to such projects as schools and transportation terminals.

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