Slight Rebound for Architecture Billings in April

Following a sizable decrease in demand for design services in March, Architecture Billings Index (ABI) returned to positive territory in April, according to a report from the American Institute of Architects (AIA).

AIA’s ABI score for April showed a small increase in design services at 50.5, up from 47.8 in March. Any score above 50 indicates an increase in billings. Additionally, business conditions remained strong at firms located in the South. Despite this and the positive overall billings score, most regional and sector indicators continue to display decreasing demand for design services.

“In contrast to 2018, conditions throughout the construction sector recently have become more unsettled,” says AIA chief economist Kermit Baker. “Though we may not be at a critical inflection point, the next several months of billing data will be indicative of the health of the industry going into 2020.”

The Dodge Momentum Index Dips in April

The Dodge Momentum Index fell 0.5% in April to 144.3 (the year 2000 = 100) from the revised March reading of 145.1. The momentum index, issued by Dodge Data & Analytics, is a monthly measure 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 retreat in April was the result of the commercial component falling 1% while the institutional component rose a scant 0.2%.

The index has clearly lost some impetus over the last 12 months. The overall momentum index is down 8.5% since April 2018, with the commercial component 4.7% lower and the institutional component 13.9% lower. However, over the past several months the index has moved in a crab-like fashion with neither strong gains nor losses. This suggests that there continues to be a reasonably healthy number of projects in the planning pipeline to support a moderate level of construction activity in the coming months.

April Construction Starts Retreat 15 Percent

The value of new construction starts in April fell 15% to a seasonally adjusted annual rate of $685.2 billion, pulling back following the 16% hike that was reported in March, according to Dodge Data & Analytics.

Steep declines were registered by two of the three main construction sectors. Nonbuilding construction, which is comprised of public works and electric utilities/gas plants, plunged 31% from its elevated March amount. Nonresidential building fell 18% in April after being boosted in March by groundbreaking for the $1.6 billion Toyota-Mazda automotive manufacturing facility in Huntsville, Ala., among other large projects. Meanwhile, residential building in April decreased 1%, as a modest rebound for multifamily housing was outweighed by further slippage for single family housing.

During the first four months of 2019, total construction starts on an unadjusted basis were $224.5 billion, down 8% from the same period of 2018. On a 12-month period moving total basis, total construction starts for the 12 months ending April 2019 held steady with the corresponding amount for the 12 months ending April 2018.

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