Volume 48, Issue 12- December 2013
Architecture Billings Index Slows Down
Following three months of accelerating demand for design services, the Architecture Billings Index (ABI) reflected a somewhat slower pace of growth in October, according to the latest report from the American Institute of Architects (AIA). The ABI reflects the approximate nine- to 12-month lead time between architecture billings and construction spending. The AIA reported the October ABI score was 51.6, down from a mark of 54.3 in September. This score reflects an increase in design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 61.5, up from the reading of 58.6 the previous month.
CBI Remains Stable in Third Quarter
Nonresidential construction spending remained unchanged from the second to third quarter of this year, according to the Construction Backlog Indicator (CBI) report produced by Associated Builders and Contractors (ABC).
According to the report, nonresidential construction spending remains roughly 20 percent below the cyclical and all-time peak achieved in October 2008. While the most recent CBI is 2.8 percent higher compared to a year ago, it suggests the long-awaited rapid acceleration in nonresidential construction spending will not occur in the very near term, according to ABC.
“Even slow growth leads to construction opportunities,” says ABC chief economist Anirban Basu. “Ongoing recovery steadily produces lower vacancy rates, higher rents, and more comfortable lenders. However, growth also results in higher interest rates and ABC believes this factor will begin to serve as a more meaningful speed governor in late 2014 or in 2015.”
Dodge Momentum Index Slips
The Dodge Momentum Index decreased 0.9 percent in October compared to the previous month, according to McGraw Hill Construction, a division of McGraw Hill Financial. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year.
October’s decline brought the Momentum Index to 115.3 (2000=100), down from September’s 116.4, although still well above the reading of 90.8 registered at the end of last year, according to the latest report from McGraw Hill.