Architecture Billings Continue Historic Rebound

Demand for design services from U.S. architecture firms continues to grow at a vigorous pace, according to a new report from the American Institute of Architects (AIA). The Architecture Billings Index (ABI) score for May rose to 58.5 compared to 57.9 in April (any score above 50 indicates an increase in billings). May’s ABI score is one of the highest in the index’s 25-year history.

During May, the new design contracts score reached its second consecutive record high with a score of 63.2, while new project inquiries also recorded a near-record high score at 69.2.

Dodge Momentum Index Jumps in May

The Dodge Momentum Index moved 9.1% higher in May to 178.0 (2000=100), up from the revised April reading of 163.2. The Momentum Index, issued by Dodge Data & Analytics, is a monthly measure of the first (or initial) report for nonresidential building projects in planning, leading to construction spending for nonresidential buildings by a full year.

May’s jump resulted from a significant increase in commercial planning activity, which posted its strongest month-over-month rise since October 2017. Institutional planning, meanwhile, fell by less than one percentage point.

Commercial planning had been in a holding pattern over the last four months. Still, it broke out in May due to several sizable data center, office and warehouse projects that peaked at a 13-year high for the commercial component of the Momentum Index. While essentially flat in May, institutional planning remains at levels not seen since 2009. On a year-over-year basis, commercial and institutional planning were up from May
2020 (38% and 47% respectively). The Momentum Index overall was also 41% higher than in May 2020.

Total Construction Starts Drop Slightly in May

According to Dodge Data & Analytics, total construction starts dropped 1% in May to a seasonally adjusted annual rate of $902.8 billion.

Nonresidential building starts jumped 10% to a seasonally adjusted annual rate of $309.5 billion. Manufacturing starts more than doubled over the month, and commercial starts gained 6%. Institutional starts were down 2%. Year-to-date, total nonresidential building starts were down 5% compared to the first five months of 2020. Institutional starts were 9% lower, while commercial starts were down 7%, with only the office category losing ground. Manufacturing starts were up 42%.

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