The AIA’s monthly Architecture Billings Index (ABI) increased to a score of 50.8 in October, up 2.4 points from September's 48.4, the Institute announced today. More importantly, those 2.4 points moves the index and the design and construction market from contraction back to growth.
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, like this month, represents an increase in billings from the previous month, while a score under 50 represents a contraction.
October's reading is a welcome, albeit modest, rebound from the AIA's August and September readings, which were the longest period of contraction in demand for architecture and design services industry in four years.
Despite the increase in billings, the new project inquiries and design contracts indexes decreased from September levels, indicating that volatility in design activity is likely to persist in coming months. Inquiries decreased 4 points, from 59.4 in September to 55.4 in October, and design contracts fell to 48.7 from 51.4 a month prior.
“There was a collective sense of uncertainty throughout the design and construction industry leading up to the presidential election,” said AIA Chief Economist, Kermit Baker, Hon. AIA. “Hopefully we’ll get a sense of what direction we will be headed once we get a clearer read on how the new administration’s policies might impact the overall economy as well as the construction industry.”
Regional billings, which are calculated as a three-month moving average, increased in two of four regions during October. The South posted the highest score of 53.7, and has been the top region for billings for six consecutive months. Billings also increased in the Northeast, to a score of 47.3 from September's 46.1. Growth decelerated a bit in the Midwest and the West last month as well.
Billings in the multifamily residential and institutional sectors improved marginally in October, posting scores of 50.7 and 49.1, respectively. Demand in the commercial/industrial and mixed-use sector eased slightly as well. (Results of the sectors and regions are calculated as a moving average of the past three months.)