The Architecture Billings Index (ABI) Continues to Increase

The Architecture Billings Index (ABI) recorded its seventh consecutive positive month, according to a report from the American Institute of Architects (AIA). The ABI score for August was 55.6, up from July’s score of 54.6. Any score above 50 indicates an increase in billings from the prior month. During August, scoring for both the new project inquiries and design contracts moderated slightly but remained in positive territory, posting scores of 64.7 and 56.6, respectively.

Dodge Momentum Index Loses Steam in August

The Dodge Momentum Index dropped 3% in August to 148.7 (2000=100) from the revised July reading of 154.0. The Momentum Index, is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year.

The commercial planning component lost 2% in August, while the institutional component fell 6%.

Projects entering the earliest stages of planning have declined following the torrid pace set in the spring. The decline in August was the third consecutive drop in the Momentum Index, which is now off 14% from the most recent high in May. The commercial component is down 10% and the institutional component is 22% lower since May.

More data center, education, and warehouse projects moved into planning relative to the prior month. Additionally, the overall level of the Momentum Index is 19% higher than one year ago; institutional planning was up 17% and commercial planning was 20% higher than last year.

Total Construction Starts Decline in August

Total construction starts fell 9% in August to a seasonally-adjusted annual rate of $782.8 billion, according to Dodge Data & Analytics. All three sectors—nonresidential, residential and nonbuilidng—were down for the month.

Nonresidential building starts fell 13% in August to a seasonally-adjusted annual rate of $244.9 billion. The declines were broad-based across building types with few bright spots. Commercial starts dropped 10%, institutional starts lost 15%, and manufacturing starts fell 37% following a sizable gain in July. Despite overall losses, there were gains in the retail, parking, and public buildings. Year-to-date data through the first eight months show
nonresidential building starts were 3% higher. Commercial starts increased 2% and manufacturing starts were 33% higher. Institutional starts, however, were 1% lower through eight months.

For the 12 months ending in August 2021, nonresidential building starts were 8% lower than in the 12 months ending in August 2020. Commercial starts were down 8%, institutional starts fell 4%, and manufacturing starts dropped 29% in the 12 months ending August 2021.

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