Architectural Billings Continue to Contract in 2021

A slight improvement in business conditions has led to fewer architecture firms reporting declining billings, according to a report from the American Institute of Architects (AIA).

AIA’s Architecture Billings Index (ABI) score for January was 44.9* compared to 42.3 in December (any score below 50 indicates a decline in firm billings). Last month’s score indicates overall revenue at U.S architecture firms continued to decline from December to January, however, the pace of decline slowed. Inquiries into new projects during January grew for the second month in a row, with a score of 56.8 compared to 51.7 in December. The value of new design contracts also reflected an easing in the pace of decline, rising to a score of 48.8 in January from 47.0 the previous month.

*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 Increases to Start 2021

The Dodge Momentum Index increased 3.1% in January to 139.4 (the year 2000 = 100) from the revised December reading of 135.2. The commercial component of the Momentum Index moved 9.9% higher, offsetting an 11.7% decrease in the institutional component.

January’s increase marked the highest level in the Momentum Index since the COVID-19 pandemic began. Commercial planning is at its highest level since before the Great Recession, fueled by an increasing number of warehouse projects and, to a somewhat lesser degree, office projects. On a year-over-year basis, the overall Momentum Index is 2.2% below January 2020. The commercial component is up 12.3% year-over-year, while the institutional component is down 27.7%.

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 Fall in Beginning of 2021

Total construction starts dropped 4% in January to a seasonally adjusted annual rate of $794.3 billion. Nonresidential building starts were flat in January, while nonbuilding starts dropped 10% and residential starts were 4% lower. From a regional perspective, starts  were lower in three of the five regions: the Midwest, South Atlantic and South Central. Starts rose, however, in the Northeast and West.

For the 12 months ending January 2021, total construction starts were 11% below the 12 months ending January 2020. Nonresidential starts were down 25%, while nonbuilding starts dropped 15%. Residential starts, however, were 5% higher for the 12 months ending January 2021.

Nonresidential building starts were unchanged in January at a seasonally adjusted annual rate of $224.5 billion. Commercial starts were 1% higher during the month as a sizeable gain in warehouse construction offset declines elsewhere. Institutional building starts fell 9% in January, with education and healthcare construction down sharply. For the 12 months ending January 2021, nonresidential building starts tumbled 25% relative to the 12 months ending January 2020. Commercial starts dropped 27% and institutional starts were 15% lower.

For the 12 months ending January 2021, total residential starts were 5% higher than the 12 months ending January 2020. Single family starts increased 12%, while multifamily starts slid 12% on a 12-month sum basis.

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