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For the second consecutive month, the Architecture Billings Index (ABI) indicated a modest increase in design activity in March. As a leading economic indicator of construction activity, the ABI reflects the approximate nine- to 12-month lead time between architecture billings and construction spending.
The American Institute of Architects (AIA) reported the March ABI score was 51.7, up from a mark of 50.4 in February. This score reflects an increase in design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 58.2, up from a reading of 56.6 the previous month.
“Business conditions at architecture firms generally are quite healthy across the country,” said AIA chief economist Kermit Baker, Hon. AIA, PhD. “However, billings at firms in the Northeast were set back with the severe weather conditions, and this weakness is apparent in the March figures. “The multi-family residential market has seen its first occurrence of back-to-back negative months for the first time since 2011, while the institutional and commercial sectors are both on solid footing.”
Key March ABI highlights:
Regional averages: South (54.5), Midwest (51.0), West (50.4), Northeast (45.8)
Sector index breakdown: institutional (53.2), commercial / industrial (53.0), multi-family residential (49.7), mixed practice (46.2)
Project inquiries index: 58.2
Design contracts index: 52.3
The regional and sector categories are calculated as a 3-month moving average, whereas the national index, design contracts and inquiries are monthly numbers.
The ABI, produced by the AIA Economics & Market Research Group, is a leading economic indicator that provides an approximately nine- to 12-month glimpse into the future of nonresidential construction spending activity. The diffusion indexes contained in the full report are derived from a monthly “Work-on-the-Boards” survey that is sent to a panel of AIA member-owned firms. Participants are asked whether their billings increased, decreased, or stayed the same in the month that just ended as compared to the prior month, and the results are then compiled into the ABI. These monthly results are also seasonally adjusted to allow for comparison to prior months. The monthly ABI index scores are centered around 50, with scores above 50 indicating an aggregate increase in billings, and scores below 50 indicating a decline. The regional and sector data are formulated using a three-month moving average.