The monthly Architecture Billings Index (ABI) came in at a score of 49.5 in January, down 6.1 points from December's 55.6, the American Institute of Architects announced today.
The ABI is a leading economic indicator of construction activity in the U.S., and reflects a nine- to 12-month lead time between architecture billings and construction spending nationally, and regionally, as well as by project type. A score above 50 represents an increase in billings from the previous month, while a score below 50, as seen in January, represents a contraction.
Following a strong reading in December, when architecture billings soared to a nine–year high, the ABI contracted in January, primarily due to a decrease in billings seen in the Northeast and Midwest. January's contraction does not come as a surprise, as the new project inquiries index, which is the most reliable indicator of future billings, eased in December. The new project inquiries index ticked up 2.4 points to a score of 60.0 in January, indicating that billings are likely to rebound in February.
“This small decrease in activity, taking into consideration strong readings in project inquiries and new design contracts, isn’t exactly a cause for concern,” said AIA chief economist Kermit Baker in a press release. “The fundamentals of a sound nonresidential design and construction market persist.”
The design contract portion of the index increased 1.4 points to a score of 52.1 in January, marking the fourth consecutive month of growth.
Regional billings, which, unlike the national score, are calculated as a three-month moving average, increased in three of four regions during January. Continuing the trend seen over the past year, the highest amount of billings were recorded in the South, with a score of 54.2—up 1.9 points from December. Billings also increased in the Northeast and the West with scores of 53.0 and 48.8, respectively. The only region to see a contraction in January was the Midwest, dropping 0.9 points month-over-month to a score of 52.4.
Architecture billings in the commercial/industrial, and institutional sector posted the strongest gains seen in 12 months with scores of 53.4 and 54.6, respectively. Architecture billings eased in the residential sector, dipping 0.5 points to 48.1, as well as in the mixed-use sector, dipping 1.1 points in January to 48.1. (Results of the sectors and regions are calculated as a moving average of the past three months.)