ABI Continues Downturn at Slower Pace

While architecture billings moderated in September, design activity shows signs of remaining sluggish at U.S. architecture firms, according to a new report from the American Institute of Architects (AIA).

The Architecture Billings Index (ABI) score in September is 49.7, which increased from the August score of 47.2. However, any score below 50 indicates a decrease in billings. During September, both the new project inquiries and design contracts scores were positive, posting scores of 59.0 and 54.4 respectively.

“Though still in negative territory, the moderating billings score along with the rebound in design contracts and inquiries serve as a continued note of caution for the industry,” says AIA chief economist Kermit Baker. “Continued weakness in the larger economy still doesn’t bode well for future design services, which will likely see continued volatility in the months ahead.”

Dodge Momentum Index Posts Gain in September

The Dodge Momentum Index moved 4.1% higher in September to 143.6 (the year 2000 = 100) from the revised August reading of 137.9. 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 gain in September was due entirely to an 8.9% increase in the commercial component.

For the third quarter, the overall Momentum Index averaged 140.1, a scant increase of 0.7% from its average in the previous quarter. Compared to the third quarter of 2018, however, the Momentum Index is 8.6% lower with the commercial component 3.7% lower than a year ago and the institutional component down 16.2%. While the dollar volume of projects in planning is certainly lower than it was a year ago, the index has moved more sideways than downward over the last two quarters.

September Construction Starts Decrease 5 Percent

New construction starts moved 5% lower in September to a seasonally adjusted annual rate of $774.1 billion, according to Dodge Data & Analytics. This marks the second consecutive monthly decline in construction starts. By major sector, nonbuilding construction fell 13% in September from the previous month, while residential construction dropped 6%. On the plus side, nonresidential construction starts rose 1%, aided by the start of a large manufacturing project.

Through the first nine months of 2019, total construction starts were  3% lower than 2018 due to pullbacks in both residential and nonresidential construction starts. However, nonbuilding construction starts are 4% higher year-to-date as a result of strong gains in electric utilities/gas plants.

Nonresidential building starts inched 1% higher in September to $287 billion (at a seasonally adjusted annual rate) from its August 2019 level. The increase was a result of 243% growth in manufacturing construction. commercial construction starts fell 14% over the month as the office sector pulled back from a very strong level of activity during the prior month. Institutional construction starts fell 1%.

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