Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment.
From the AIA: Architecture Billings Index continues growth streak
With all geographic regions and building project sectors showing positive conditions, there continues to be a heightened level of demand for design services signaled in the latest Architecture Billings Index (ABI). As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the August ABI score was 53.7, up from a score of 51.9 in the previous month. This score reflects an increase in design services provided by U.S. architecture firms (any score above 50 indicates an increase in billings). The new projects inquiry index was 62.5, up from a reading of 59.5 the previous month, while the new design contracts index eased somewhat from 56.4 to 54.2.
“The August results continue a string of very positive readings from the design professions, pointing to future healthy growth across the major construction sectors, as well as across the major regions of the country,” said AIA Chief Economist, Kermit Baker, Hon. AIA, PhD. “Given the focus and discussions around the infrastructure needs of the nation, we expect strong growth in design activity for the coming months and years.”
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• Regional averages: South (55.7), Northeast (54.3), Midwest (52.5), West (51.3)• Sector index breakdown: commercial / industrial (57.6), multi-family residential (53.8), mixed practice (52.5), institutional (50.1)
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This graph shows the Architecture Billings Index since 1996. The index was at 53.7 in August, up from 51.9 in July. 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 was positive in 10 of the last 12 months, suggesting a further increase in CRE investment in 2017 and into 2018.