Volume 50, Issue 2 - February 2015

IndustryOutlook

Architectural Billings Index Up in December

Demand for design services increased in 10 of 12 months in 2014, according to the American Institute of Architects (AIA) and its Architectural Billings Index (ABI), which “points to a healthy outlook for the nonresidential construction industry.”

The ABI reflects the approximate nine-to 12-month lead time between architecture billings and construction spending. AIA reported the December ABI score was 52.2, up from a mark of 50.9 in November.

According to AIA, the score reflects an increase in design activity (any score above 50 indicates an increase in billings). The new projects inquiry index was 58.2, following a mark of 58.8 the previous month. Design contracts posted a score of 49.9, after a 54.9 mark in November.
Dec 2013
Dec 2014
ABI Score
48.5
52.2
New Projects Inquiry Score
59.2
58.2


Dodge Momentum Index Hits Highest Mark Since February 2009

The Dodge Momentum Index saw a 4 percent increase in December, going from a revised 123.8 in November to 128.7, according to Dodge Data & Analytics. 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. The Index is currently at its highest reading since February 2009 and is 17 percent higher than one year ago.

According to Dodge Data & Analytics, the December rise was the result of greater planning activity in both the commercial and institutional sectors. The commercial sector rose 4.1 percent, while the institutional sector increased 3.8 percent. There were nine commercial building projects exceeding $100 million that entered into planning during the month.

Dodge Momentum Index (Year 2000=100)
  Nov. 2014 Dec. 2014 % Change Dec. 2013 Dec. 2014
Dodge Monument Index 123.8 128.7 4.0% 118.3 128.7
Commercial Building 132.6 138.0 4.1% 112.3 138.0
Institutional Building 113.0 117.3 3.8% 125.7 117.3
Source: Dodge Data & Analytics


Nonresidential Building Strong in November

Positive November construction statistics raised the Dodge Index to 143, up from a revised 127 for October and marking the strongest month so far in 2014, according to Dodge Data & Analytics. At a seasonally adjusted annual rate of $677.8 billion, new construction starts in November climbed 13 percent from the previous month.

Nonresidential building had a particularly strong month, lifted by the start of two massive manufacturing plants and an airport terminal redevelopment. For the first 11 months of 2014, new construction starts on an unadjusted basis were $530.8 billion, up 7 percent from the same period a year ago.

Nonresidential building in November soared 32 percent to $256.7 billion (annual rate)—a substantial boost coming from a 253-percent increase for the manufacturing plant category. If the manufacturing plant category is excluded, nonresidential building in November would have still shown a moderate gain,
rising 10 percent. The commercial building group in November grew 7 percent, resuming its upward track after easing back in the previous two months. Hotel construction posted a 15-percent November gain, and office construction advanced 7 percent.

During the first 11 months of 2014, nonresidential building climbed 17 percent relative to the same period a year ago. Manufacturing plant construction surged 82 percent year-to-date, pushed upward by the large projects in November as well as numerous energy-related projects that were entered earlier in 2014. Residential building in November, on the other hand, fell 6 percent to $238.5 billion (annual rate). Multifamily housing retreated after its strong October performance, sliding 21 percent. Despite the decline, there were still a substantial number of large multifamily projects that reached groundbreaking in November, including 11 projects valued at $100 million or more.

November 2014 Monthly Construction Rates
Seasonally Adjusted Annual Rate, In Millions of Dollars
  Oct. 2014 Nov. 2014 % Change
Nonresidential Building $194,992 $256,682 +32
Residential Building 254,108 238,522 -6
Nonbuilding Construction 149,518 182,561 +22
Total Construction $598,618 $677,765 +13


Year-to-Date Construction Starts
Unadjusted Totals, in Millions of Dollars
  11 months 2013 11 months 2014 % Change
Nonresidential Building $164,560 $191,830 +17
Residential Building 195,560 209,874 +7
Nonbuilding Construction 134,963 129,121 -4
Total Construction $495,083 $530,825 +7
Source:Dodge Data & Analytics


Construction Employment Mostly Positive in November


The U.S. construction industry added 20,000 jobs in November, a quarter of which came in the nonresidential sector, according to the Bureau of Labor Statistics. October’s overall construction estimate was revised downward from 12,000 to 7,000 net new jobs, and nonresidential construction lost 2,100 jobs in October, after revisions.

Nonresidential building construction employment fell by 2,400 jobs for the month but is up by 9,500 jobs, or 1.4 percent, since November 2013.

Construction employment totaled 6,109,000 in November, the highest total since April 2009, with a 12-month gain of 213,000 jobs or 3.6 percent.

Nonresidential contractors hired a net of 3,600 workers for the month and 90,100 (2.4 percent) since November 2013. However, nonresidential building construction lost 2,400 jobs.



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