Architecture Firms Report Billing Declines

Architecture billings softened for a third consecutive month in December, reported the American Institute of Architects (AIA) in its monthly Architecture Billings Index (ABI).

December’s ABI score of 47.5 was a slight improvement over November’s tally of 46.6. But the number remains below the 50-score threshold (any score below 50 indicates a decline in billings). “Despite strong revenue growth last year, architecture firms have modest expectations regarding business conditions this coming year,” says AIA chief economist Kermit Baker. Business conditions remained soft across the country in December, as billings declined in all regions for the second consecutive month.

Billings also declined at firms of all specializations in December, with the weakest conditions reported at firms with a multifamily residential specialization. Even firms with an institutional specialization saw a more significant decline in billings. Overall, the commercial/industrial sector reported a score of 45.2, institutional scored 47.3, and residential scored 44.3.

Dodge Momentum Index Increases in December

The Dodge Momentum Index (DMI) concluded 2022 with a 6.6% increase in December to 222.2 from November’s reading of 208.3. The Dodge Construction Network (DCN) reports that the commercial component of the DMI rose 8.4%, and the institutional component rose 2.7%. 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.

The optimism surrounding nonresidential growth is the catalyst for the increase, says Richard Branch, chief economist for DCN.

On a year-over-year basis, the DMI was 40% higher than in December 2021; the commercial component was up 51%, and institutional planning increased 20%.

Total Construction Starts Jump 27% to End 2022

Behind the strength of manufacturing and infrastructure construction, total construction starts increased by 27% in December to a seasonally-adjusted annual rate of $1.185 trillion, according to data released by Dodge Construction Network (DCN).

For December, nonresidential building starts rose by 51% and residential starts rose by less than 1%. Throughout 2022, total construction starts were 15% higher than in 2021. Nonresidential building starts rose 38% over the year, while residential starts were down 3%.

Data provided by DCN shows that nonresidential building starts gained 51% in December to a seasonally adjusted annual rate of $549.6 billion. Commercial starts, however, dropped 10% in December due to a pullback in office and hotel starts.

Residential building starts remained flat in December at a seasonally adjusted annual rate of $353.8 billion. Single-family starts lost 5%, while multifamily starts rose 8%. Residential starts were 3% lower in 2022 when compared to 2021.

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