Architecture Billings Continue to Lose Ground

Demand for design services from U.S. architecture firms took a pointed dip last month, according to a new report from the American Institute of Architects (AIA). The pace of decline during December accelerated from November, posting an Architecture Billings Index (ABI) score of 42.6 from 46.3 (any score below 50 indicates a decline in firm billings).

Meanwhile, the pace of growth of inquiries into new projects remained flat from November to December with a score of 52.4, though the value of new design contracts stayed in negative territory with a score of 48.5.

“Since the national economic recovery appears to have stalled, architecture firms are entering 2021 facing a continued sluggish design market,” says AIA chief economist Kermit Baker. “However, the recently passed federal stimulus funding should help shore up the economy in the short-term, and hopefully by later this year there should be relief as COVID vaccinations become more widespread. Recent project inquiries from prospective and former clients have been positive, suggesting that new work may begin picking up as we move into the spring and summer months.”

Dodge Momentum Index Ends 2020 on a High Note

The Dodge Momentum Index jumped 9.2% in December to 134.6 (the year 2000 = 100) from the revised November reading of 123.3. The commercial component of the Momentum Index rose 14%, while the institutional component rose by 0.3%.

The gain in the commercial component of the Momentum Index was heartening even though the increase was mostly the result of a sizeable increase in warehouse planning, according to Dodge Data & Analytics. The warehouse sector has been one of the few areas of construction that has flourished during the pandemic thanks to increased demand for online shopping. For the full year of 2020, the Dodge Momentum Index lost 4.8% from 2019. The institutional component of the Momentum Index dropped 13.5%, while the commercial component increased 0.8%.

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 End 2020 on a Down Note

Total construction starts lost 5% in December, falling to a seasonally adjusted annual rate of $784.3 billion. Nonresidential building starts fell 11% during the month, while nonbuilding starts were 5% lower. Residential starts were essentially flat over the month. Starts were lower in three of the four regions in December; the South Central was the only region to post an increase.

Nonresidential building moved 11% lower in December to a seasonally adjusted annual rate of $225.3 billion following a sizeable increase in the previous month. Commercial starts fell 23% over the month as office, hotel and warehouse starts all posted double-digit declines. Institutional starts fell 5%, while manufacturing starts rose 59%.

In 2020, nonresidential building starts lost 24% to $239.9 billion—the lowest level since 2015. Commercial starts tumbled 26% over the year, with warehouse construction eking out a 1% gain in 2020. Institutional starts fell 13% last year, while manufacturing starts dropped 59%.

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