New design contracts signify growth in construction

Retail construction is likely up slightly in line with the overall construction market.

Both the commercial/industrial and the mixed-practice segments are up, according to the American Institute of Architects (AIA). Coming off a modest increase after two consecutive months of contraction, the Architecture Billings Index (ABI) recorded another small increase in demand for design services.

The AIA reported the November 2016 ABI score was 50.6, essentially unchanged from the mark of 50.8 in the previous month. This score reflects a slight increase in design services. Any score higher than 50 indicates an increase in billings. The new projects inquiry index was 59.5, up from 55.4 the previous month.

As a leading economic indicator of construction activity, the ABI reflects the approximate 9- to 12-month lead time between architecture billings and construction spending.

“Without many details of the policies proposed, it’s still too early to tell the likely impact of the programs of the new administration,” says Kermit Baker, AIA chief economist. “However, architects will be among the first to see what new construction projects materialize and what current ones get delayed or canceled, so the coming months should tell us a lot about the future direction of the construction market.”

Key November ABI highlights:

Regional averages: South, 51.3; Midwest, 50.9; Northeast, 50.8; West, 48.6

Sector index breakdown: multi-family residential, 51.7; mixed-practice, 51.3; commercial/industrial, 50.4; institutional, 49.5

Project inquiries index: 59.5

Design contracts index: 50.2

The regional and sector categories are calculated as a 3-month moving average, whereas the national index, design contracts, and inquiries are monthly numbers.