Architecture Billings Continue Growth into 2020

Starting the year on a strong note, architecture firm billings strengthened slightly in January, according to a report from the American Institute of Architects (AIA).

AIA’s Architecture Billings Index (ABI) score of 52.2 for January compared to 52.1* in December reflects an increase in design services provided by U.S. architecture firms (any score above 50 indicates an increase in billings). Indicators of work in the pipeline, including new project inquiries and new design contracts remained positive, posting scores of 57.9 and 56.0 respectively.

“Despite the continued presence of volatility in the economy, design activity has begun to accelerate in recent months,” says AIA chief economist, Kermit Baker. “Even with the ongoing challenges facing the nonresidential construction sector, this upturn points to at least modest growth over the coming year.”

*Every January the AIA research department updates the seasonal factors used to calculate the ABI, resulting in a revision of recent ABI values.

Dodge Momentum Index Starts 2020 on Downside

The Dodge Momentum Index fell 2.7% in January to 152.5 from the revised December reading of 156.7 (the year 2000 = 100), snapping a four-month streak of gains. 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 decline in the overall Momentum Index was the result of an 11% drop in the institutional component, more than offsetting a 2.7% gain in the commercial component.

A similar pattern exists when comparing year-over-year growth in the components of the index. The institutional component was down 7.4% when compared to January 2019 while the commercial component was 17.4% higher than a year ago. These conflicting trends pushed the overall Momentum Index up 7.1% from January 2019.

Construction Starts Move Lower in January

Total construction starts slipped 6% from December to January to a seasonally adjusted annual rate of $759.2 billion. All three major categories moved lower in January—residential building starts fell 8%, non-residential building lost 6% and nonbuilding starts moved 2% lower.

For the 12 months ending January 2020, total construction starts were 1% higher than during the previous 12-month period. By major category, residential building starts were 1% lower and nonresidential building starts were down by less than a percentage point, but nonbuilding construction was 8% higher during the 12 months that ended in January 2020.

Nonresidential building starts fell 6% in January to a seasonally adjusted annual rate of $266.6 billion. However, if not for the tart of a large manufacturing project nonresidential building starts would have declined 11%. In January, manufacturing starts more than doubled, while commercial building starts slipped 16% and institutional starts fell 6%.

On a 12-month total basis, total nonresidential building starts were less than one percentage point lower than they were in the 12 months ending in January 2019. Commercial starts were 5% higher, while institutional starts fell 3% and manufacturing starts were down 10%.

To view the laid-in version of this article in our digital edition, CLICK HERE.