May Architecture Billings Remain Flat

Demand for design services in May remained essentially flat in comparison to the previous month, according to a report from the American Institute of Architects (AIA).

AIA’s Architecture Billings Index (ABI) score for May showed a small increase in design services at 50.2, which is slightly down from 50.5 in April. Any score above 50 indicates an increase in billings. Both the project inquiries index and the design contracts index softened in May but remained positive.

“The last four consecutive months, firm billings have either decreased or been flat, the longest period of that level of sustained of sustained softness since 2012,” says AIA chief economist Kermit Baker. “While both inquiries into new projects and the value of new design contracts remained positive, they both softened in May, another sign the amount of pending work in the pipeline at firms may be starting to stabilize.

Dodge Momentum Index Falls in May

The Dodge Momentum Index fell 1% in May to 141.0 (the year 2000 = 100) from the revised April reading of 142.4. 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 May decline for the momentum index was due entirely to a 6.9% drop by its commercial component, as its institutional component rose 8.1%.

The index continues to settle back from the most recent highs achieved last summer. On a year-over-year basis, the momentum index in May was 9.2% lower than a year ago, with a 16% drop by its commercial component outweighing a 1.8% gain by its institutional component. Although the trend for the overall momentum index is downward, so far the pullback has been measured, suggesting that there remains enough nonresidential building projects in the pipeline to support near term stability for construction activity. This is particularly true for the institutional side of nonresidential building.

May Construction Starts Advance 10 Percent

At a seasonally adjusted annual rate of $757.0 billion, new construction starts in May climbed 10% from April, according to Dodge Data & Analytics. The increase continues the double-digit swings that were reported during the previous two months, when a 16% hike for total construction starts in March was followed by a 15% decline in April, according to the report.

Each of the three main construction sectors contributed to May’s 10% gain. Nonbuilding construction rebounded 32% after depressed activity in April. Nonresidential building improved 7%, supported by groundbreaking for two very large manufacturing plant projects. Residential building edged up 2%, with modest gains for both single family housing and multifamily housing.

Through the first five months of 2019, total reconstruction starts on an unadjusted basis were  $295 billion, down 9% from the same period a year ago. On a 12-month moving total basis, total construction starts for the 12 months ending May 2018.

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