ABI Backslides in March

Following consistently increasing demand for design services for more than two years, the Architecture Billings Index (ABI) dipped into negative territory in March, according to a report from The American Institute of Architects (AIA).

The ABI score for March was 47.8, down from 50.3 in February. Indicators of work in the pipeline remained positive.

“Though billings haven’t contracted in a to note that it does follow on the heels of a particularly tough late winter period for much of the country,” says AIA chief economist Kermit Baker, “Many indicators of future work at firms still remain positive, although the pace of growth of design contracts has slowed in recent months.”

New construction starts in March advanced 16% from the previous month to a seasonally adjusted annual rate of $809.2 billion, according to Dodge Data & Analytics. The substantial gain followed a lackluster performance during the first two months of 2019, as total construction starts in March were able to climb back to a level slightly above the average monthly pace during 2018.

Nonresidential building increased 24% in March, aided by groundbreaking for several large projects. in contrast, residential building slipped 3% in March, as multifamily housing retreated for the second consecutive month.

During the first three months of 2019, total construction starts on an unadjusted basis were $164.5 billion, down 10% from the same period a year ago. On a 12-month moving total basis, total construction starts for the 12 months ending March 2019 essentially matched the corresponding amount for the 12 months ending March 2018.

The Dodge Momentum Index increased 0.5% in March to 145.5 (the year 2000 = 100) from the revised February reading of 144.8. The momentum index, issued by Dodge Data & Analytics. 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. The March uptick was due to a 2.8% increase in the commercial component of the momentum index, while the institutional component fell 3%.

The overall index essentially has moved sideways and stayed within a very narrow band of activity since the fall of last year. This is highly indicative of where building markets currently are at this late stage of the construction cycle. While economic growth is expected to ease from 2018’s strong pace, relatively healthy real estate market fundamentals and continued support for public projects such as schools and transportation terminals should enable planning activity to remain close to recent levels for the near term.

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