ABI Remains Positive in November

While architecture firms reported an increase in billings for the tenth consecutive month in November, the pace of growth continued to moderate from its peak in the summer. An ABI score of 51.0 for the month still means that most architecture firms saw billings growth at their firms, but that fewer are seeing growth now than earlier this year. Firm billings have now shifted closer to the pace of growth seen in previous recovery periods. In addition, firms continue to report a very strong amount of work in the pipeline, with inquiries and the value of new design contracts remaining near all-time high levels at 55.8.

Overall though, the majority of responding firms (78%), expect that 2022 will be a good to great year for their firm, with just 11% expecting it to be challenging or disastrous. Firms located in the Northeast were most likely to report expecting a harder time with 20% expecting it to be challenging, while large firms with annual billings over $5 million were most likely to expect to have a good to great year.

Dodge Momentum Index Declines in November

The Dodge Momentum Index fell 4% in November to 171.7 (2000=100) — down from the revised October reading of 178.1. The Momentum Index, issued by Dodge Construction Network, is a monthly measure of the initial report for nonresidential building projects in planning, which has been shown to lead construction spending for nonresidential buildings by a full year. Commercial planning fell 8% in November while institutional
planning moved 5% higher.

The value of nonresidential building projects continues to move in a sawtooth pattern, alternating between a month of gains followed by a loss. Since the pandemic began, nonresidential building projects entering planning have been more volatile than in past cycles, likely driven by  increased challenges from higher prices and lack of labor.

Despite these issues and a lack of underlying demand for some building types such as offices and hotels, the Momentum Index remains near a 14-year high. Compared to November 2020, the Momentum Index was 44% higher in November 2021. The commercial planning component was 45% higher, and institutional was 41% higher.

Total Construction Falls Sharply In November

Total construction starts fell 14% in November to a seasonally adjusted annual rate of $867.8 billion, according to Dodge Construction Network. Nonbuilding and nonresidential building starts bore the brunt of the decline, falling 30% and 21%, respectively, after seeing sharp increases in October. Residential starts gained a modest 3%. Without October’s large projects, total construction starts in November would have increased by 5%.

Nonresidential building starts lost 21% in November, falling to a seasonally adjusted annual rate of $281.1 billion, due to the start of two large manufacturing projects in the previous month. In November, commercial building starts fell 10%, while manufacturing fell by a sharp 96%. Institutional starts, by contrast, gained 28%, with all categories rising. In the first 11 months of 2021, nonresidential building starts were 11% higher. Commercial starts increased 7%, manufacturing starts were 86% higher, and institutional starts were up 5%.

Regionally, total construction starts improved in the Northeast and Midwest regions.

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