ABI Recovers in January

Architecture firm billings recovered slightly in January 2023, compared to December 2022, reports the American Institute of Architects (AIA) in its monthly Architecture Billings Index (ABI). Despite the positive news, architecture firms still reported declining billings for the fourth consecutive month. The ABI is a leading economic indicator that leads nonresidential construction activity by approximately 9-12 months.

January’s ABI score of 49.3 is a marginal improvement over December’s ABI score of 47.5 (any score below 50 indicates a decline in billings). Officials from AIA explain that inquiries into new projects and the value of new design contracts strengthened in January, as firms reported an uptick in interest in new projects.

Business conditions remain soft at firms of all specializations, according to data provided by AIA. The commercial/industry sector scored 46.8, the institutional sector scored 48.6, and the residential sector scored 45.9.

Dodge Momentum Index Falls in January

The Dodge Momentum Index (DMI) fell 8.4% in January to 201.5, down from December’s score of 220.0.

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.

In January, the commercial component of the DMI fell by 10.0%, and the institutional component receded by 4.7%. January’s data reports a slowdown in commercial planning across various sectors, including offices, warehouses, retail and hotels. Slower activity in education and amusement projects drove down the institutional portion of the DMI. On a year-over-year basis, the DMI remains 32% higher than in January 2022. The commercial component was up 40%, and the institutional component was 16% higher.

Total Construction Starts Decrease in January

The number of total construction starts declined by 27% in January, reports the Dodge Construction Network (DCN).

During January, nonresidential building starts fell 38%, and residential starts lost 20%. Year-to-year, total construction was 14% lower in January 2023 than in January 2022, nonresidential building starts decreased by 2% and residential starts lost 34%.

For the 12 months ending January 2023, total construction starts were 13% higher than the 12 months ending January 2022. Nonresidential starts were 36% higher, while residential starts lost 6%.

Nonresidential building starts declined in January to a seasonally adjusted annual rate of $340 billion. Manufacturing starts led the pullback in January, falling 91% after the start of several large projects in December. In January, commercial starts dropped 11%, with office projects the only category to post a gain, while institutional starts increased by 3% due to a gain in education starts.

The DCN reports that residential building starts fell in January to a seasonally adjusted annual rate of $289.2 billion. Single-family starts lost 5%, and multifamily starts fell 37%. For the 12 months ending in January 2023, residential starts were 5% lower than the 12 months ending in January 2022, single-family starts were 16% lower, while multifamily starts were up 21%.

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