After a somewhat bumpy spring and summer, the Architecture Billings Index (ABI) closed out the year on a positive note with three consecutive months of modest growth.
A new report from the American Institute of Architects (AIA) highlights that the ABI registered a score of 52.5 for the month of December, up from 51.9 in November and 52.0 in October. According to how the index is tabulated, any score above 50.0 indicates an increase in the demand for design services, while a score below 50 indicates a decline in demand. The three-month growth spurt follows contractions that took place over the summer, when the ABI scored 49.7 in September and 47.2 in August.
December's positive score was fueled by growth in both new project inquiries and design contract executions, which surged to show scores of 58.7 and 53.4, respectively. It appears that the mid-year slump was likely due to a spate of economic shock that took shape as the Trump administration's trade wars with China and the European Union hit a fever pitch. Trade tensions have lessened comparatively in recent months as uncertainty over issues like Brexit and economic brinksmanship has lessened. In tandem, the country's residential construction sector has surged in recent months, also likely contributing to positive growth.
Each month, the AIA breaks down design demand regionally; In December 2019, three of the country's four regions showed growth. Only the Northeast region, which has consistently shown decreased demand for design services in 2019, showed contraction with a score of 44.0. The West, South, and Midwest regions scored 54.0, 52.5, and 51.9, respectively. Growth in these areas is fueled by a variety of initiatives, including home-building in the South and Midwest, office and commercial building in the West, and broad institutional growth.
When broken down by project sector, the latest survey indicates that commercial / industrial construction is continuing its year-end rally, with a score of 54.0, up from November's score of 52.9. This sector took a sharp hit during the middle part of the year as the trade wars intensified.
With a score of 51.0, the multi-family residential sector grew, as well, though slightly less than in November, when the index registered a score of 51.5. Multi-family construction has increased by over 20% in recent months to record highs. Mixed practice and institutional projects grew modestly at 50.8 each. Both the regional and sector-based breakdowns are presented as a "three-month moving average," while the national, billings, and inquiries figures are calculated as monthly averages.
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