After two strong months of increases in design services,
the Architecture Billings Index (ABI) for August took a small step backwards,
dropping to a score of 49.1 after seeing its two highest months in June (55.7)
and July (54.7). (Scores above 50 indicate an increase in billings and scores below
50 indicate a decrease.) This is only the third time this year we’ve seen a
decrease in design services, but we are talking about major decreases in
billings. In January the score was 49.9 and in April it was 48.8, nothing to be
concerned about based on the growth we’ve seen the rest of the year. The ABI
acts as a barometer for future nonresidential construction spending since the
lead time between billings and construction spending is between nine and twelve
months.
The scores design contracts index and new projects
inquiry index both showed growth. The project inquiries index was at 61.8 for
August and the design contracts index increased from 54.5 in July to 55.3.
The three-month regional averages for all regions had
increases with the exception of the Northeast. After two consecutive months
above 50, the Northeast dropped down to 46.8. The Midwest led all regions with
a score of 56.1 followed by the South at 53.8 and the West at 50.2.
Looking at the sector index breakdown, Multi-family
Residential (49.5) and Commercial/Industrial (49.7) were both hovering just
below the 50 mark. The Institutional and Mixed Practice sectors remained in
growth mode with scores of 53.7 and 52.8, respectively.
After the stellar months that architectures billings saw
in June and July, it’s not all that surprising to see a slight dip like we did
this month. As a whole, the construction industry is doing well and
construction spending has been robust this year so a hiccup here and there is
no cause for alarm.
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