Architecture Billings Index Bounces Back in March

Architectural firms reported an increase in billings for the first time since September 2022, according to the American Institute of Architects. The organization’s monthly Architecture Billings Index (ABI) shows that March billings increased to 50.4 from February’s reading of 48.0.

The ABI is a leading economic indicator that leads nonresidential construction activity by approximately 9-12 months. Any score below 50 indicates a decline in billings.

Business conditions remained soft in most sectors, except in mixed practices (firms that do not have at least half of their billings in any other category), which scored 53.9. Institutional scored 48.8, commercial/industrial scored 49.7 and multi-family residential scored 44.2

Dodge Momentum Index Dips in March

Tightening lending standards contributed to declining nonresidential building projects in planning for March, reports Dodge Construction Network (DCN). The organization’s Dodge Momentum Index (DMI) fell 8.6% in March to 183.7 from February’s reading of 201.0. DCN data shows the DMI’s commercial component fell by 6.6%, and the institutional component decreased by 12.9%.

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.

Commercial planning was hampered in March by fewer projects in the office and warehouse sectors, which declined by 29% and 11%, respectively. Meanwhile, institutional planning experienced a more significant decline, with healthcare falling by 17%, education dipping by 6%, and amusement planning dropping by 14%.

The steady influx of research and development laboratories supported the weakening sector.

Construction Industry Shows Strength to Start 2023

The nonresidential building sector helped propel total construction starts in March to a three-month high. The Dodge Construction Network reports a 19% rise in total construction starts in March. This follows a 6% increase in February. In March, nonresidential starts rose 33% and residential starts moved 5% higher.

Nonresidential building starts increased to a seasonally-adjusted annual rate of $492 billion. Commercial starts increased by 28%, with retail as the only category to fall, while institutional starts improved by 11% due to numerous healthcare projects getting underway.

Residential building starts increased in March to a seasonally-adjusted annual rate of $335 billion. Single-family starts rose by 4%, and multifamily starts increased by 8%.

Total construction starts were 9% below that of 2022 in quarter one of 2023. Year-to-date, residential starts were down 29%, while nonresidential grew 6%. Single-family starts rose by 4%, and multifamily starts increased by 8%.

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