AIA: "Architecture Billings Index Continues Its Streak of Soft Readings"
Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment.
From the AIA: Architecture Billings Index Continues Its Streak of Soft Readings
Demand for design services in July remained essentially flat in comparison to the previous month, according to a new report released today from The American Institute of Architects (AIA).
AIA’s Architecture Billings Index (ABI) score of 50.1 in July showed a small increase in design services since June, which was a score of 49.1. Any score above 50 indicates an increase in billings. In July, the design contracts score dipped into negative territory for the first time in almost a year. Additionally, July billings softened in all regions except the West, and at firms of all specializations except multifamily residential.
“The data is not the same as what we saw leading up to the last economic downturn but the continued, slowing across the board will undoubtedly impact architecture firms and the broader construction industry in the coming months,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “A growing number of architecture firms are reporting that the ongoing volatility in the trade situation, the stock market, and interest rates are causing some of their clients to proceed more cautiously on current projects.”
• Regional averages: West (51.2); Midwest (48.9); South (48.3); Northeast (48.3)
• Sector index breakdown: multi-family residential (50.6); institutional (49.8); commercial/industrial (49.2); mixed practice (48.9)
Click on graph for larger image.
This graph shows the Architecture Billings Index since 1996. The index was at 50.1 in July, up from 49.1 in June. Anything above 50 indicates expansion in demand for architects' services.
Note: This includes commercial and industrial facilities like hotels and office buildings, multi-family residential, as well as schools, hospitals and other institutions.
According to the AIA, there is an "approximate nine to twelve month lag time between architecture billings and construction spending" on non-residential construction. This index has been positive for 10 of the previous 12 months, suggesting some further increase in CRE investment in 2019 - but this is the weakest five month stretch since 2012.