Design Service Demand Tumbles

Demand for design services decreased for the second consecutive month in November following nearly two years of continuous growth, states the American Institute of Architects (AIA). The association reports that November’s Architecture Billings Index (ABI) score was 46.6 (any score below 50 indicates a decline in firm billings).

October’s ABI reading was the first decline in billings since January 2021. Inquiries into new projects slowed but remained above the 50 threshold with a score of 52.0. New design contracts, however, remained negative, with a score of 46.9.

Regionally, all but the South (50.5) posted scores in the negative. The Midwest scored 47.6; the West scored 45.8, and the Northeast scored 42.4. Each region’s score decreased from October. Multi-family residential and commercial/industrial projects reported a score of 46.1 and 44.2, respectively. The institutional sector dropped below the 50 mark with a score of 47.7.

Hotel, Data Center Projects Contribute to Increase

The Dodge Momentum Index (DMI) increased by 3.8% in November to 207.2 from October’s score of 199.6, reports the Dodge Construction Network (DCN). The DMI’s commercial component rose by 4.3% and the institutional component increased by 2.7%. The DMI is a monthly measure of the initial report for nonresidential building projects in planning. The measure is shown to lead construction spending for nonresidential buildings by a full year.

The DCN states that commercial planning rose substantially thanks to an increase in hotel and data center projects. Education and healthcare projects slowed in November, however. The commercial component increased by 13% and the institutional component rose by 2.9%. Year-to-year, the DMI reading is 28% higher, the commercial component 29% higher and institutional planning 25% higher.

Total Construction Starts Decline in November

Volatility in the construction industry caused total construction starts to decline 18% in November to a seasonally adjusted annual rate of $926.3 billion, states the Dodge Construction Network (DCN). The organization reports that nonresidential building starts fell 25% and residential starts dropped 5%.

Despite the decline, total construction starts were 14% higher in the first 11 months of 2022 compared to the same period in 2021. Year-to-year nonresidential building starts rose 36% and residential starts were down 1%.

The DCN reports that nonresidential building starts fell 25% in November to a seasonally adjusted annual rate of $361.6 billion. Commercial starts fell 33%, institutional starts decreased 12% and manufacturing declined 69%.

Residential building starts fell 5% in November to a seasonally adjusted annual rate of $346.5 billion. Through the first 11 months of 2022, nonresidential building starts were 36% higher than the first 11 months of 2021. Commercial starts grew 25%, and institutional starts rose 19%.

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