Design Services Saw Increase in February

Demand for design services in February increased at a solid pace for the sixth month in a row, according to a report from The American Institute of Architects (AIA).

AIA’s Architecture Billings Index (ABI) score of 53.4 for February reflects an increase in design services provided by U.S. architecture firms (any score above 50 indicates an increase in billings). During February, both the new project inquiries and design contracts scores moderated slightly but remained in positive territory, posting scores of 56.5 and 52.0 respectively.

“Business conditions at architecture firms have been surprisingly positive so far this year. However, firms were just beginning to feel the impact of the dramatic slowdown caused by COVID-19 as this survey was being conducted in early March,” says AIA chief economist, Kermit Baker. “The rapid pull-back in activity throughout the economy will obviously be felt in the design and construction sector, and architecture firms will be one of the first to see how these events play out.

Dodge Momentum Index Dips in February

The Dodge Momentum Index continued to slide in February, dropping 1.8% to 148.7 (the year 2000 = 100), down from the revised January reading of 151.4. The numbers reflect a slow start to 2020 after a surge in late 2019, and the current numbers are the result of declines in both components of the Momentum Index, with the commercial component down 2.1% and the institutional component declining by 1.2%.

Despite the overall decline in the Momentum Index for  the last two months, it remains 11% higher on a year-over-year basis. The commercial component, currently sitting at 172.3, is 20% higher than a year ago, while the institutional component is 2% lower at 119.5. The overall read on these numbers indicates construction activity in 2020 should remain near its recent highs.

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.

Construction Starts Dip Slightly in February, Up for the Year

Total construction starts lost 1% from January to February dropping to a seasonally adjusted annual rate of $767.5 billion. Large projects in the office and healthcare sectors provided a boost for overall nonresidential building, while residential and nonbuilding construction starts moved lower.

For the 12 months ending February 2020 total construction starts were 3% higher than the previous 12-month period. By major category, nonresidential building starts were 3% higher, while residential starts were up 1%, with nonbuilding starts increasing 7%.

Nonresidential building gained 7% in the month of February to $285.9 billion on the back of several large projects getting underway in the office and healthcare sectors. February’s commercial construction starts rose 7%, while institutional starts moved 13% higher. Manufacturing starts by contrast fell 27% in response to several large projects that broke ground in January.

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