The ABI Softens in February

The Architecture Billings Index (ABI) decreased in February 2023 as reported by the American Institute of Architects (AIA). February’s reading of 48.0 is a slight drop from January’s score of 49.3, a softening that AIA officials state is still a positive sign since the pace of decline remains relatively modest and has not accelerated dramatically. Any score below 50 indicates a decline in billings.

The ABI is a leading economic indicator that leads non-residential construction activity by approximately 9-12 months. The data is used by firms and business leaders to access business conditions and predict and track the market.

Business conditions remained soft at all specialized contracting firms, including those in the glass industry. The commercial/industry sector scored 45.8, the institutional sector scored 46.9, and the residential sector scored 46.2. The residential sector was the only specialization to improve in February.

Dodge Momentum Index Rebounds in February

The Dodge Momentum Index (DMI) rebounded in February following an 8.4% decline in January. February’s DMI increased by 1.9% to 203.0 from January’s reading of 199.3. In February, the commercial component of the DMI rose by 1.4%, and the institutional component increased by 2.9%.

The DMI is a monthly measure of the initial report for nonresidential building projects in planning, shown to lead construction spending for nonresidential buildings by a full year.

Office planning and data center planning helped bolster growth in the commercial sector. The DMI reports the sector grew 20% in February. Institutional planning growth was anchored in February by education and healthcare projects, notably research facilities. On a year-over-year basis, the DMI remains 43% higher than in February 2022. The commercial component was up 55%, and the institutional component was 22% higher than a year ago.

Total Construction Starts Increase in February

Total construction starts increased by 6% in February following a 27% decline in January, reports the Dodge Construction Network (DCN). Data shows residential and nonresidential building starts rose 11% and 9%, respectively.

DCN reports that for the first two months of 2023, total construction starts were down 17% compared to 2022. On a year-over-year basis, residential starts decreased by 31%, and nonresidential starts dropped by 14%.

Nonresidential building starts grew 9% in February to a seasonally adjusted annual rate of $368 billion. Driving the growth was a 218% gain in manufacturing starts due to the start of a large electronic vehicle battery plant in Ohio.

Residential building starts rose 11% in February to a seasonally adjusted annual rate of $320 billion. Single-family and multifamily starts rose 4% and 22%, respectively.

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