Volume 50, Issue 1 - January 2015

IndustryOutlook

ABI Outlook Remains Positive

Buoyed by sustained demand for apartments and condominiums, coupled with state and local governments moving ahead with delayed public projects, the Architecture Billings Index (ABI) has been positive for seven consecutive months. 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 November ABI score was 50.9, reflecting a slight increase in design activity (any score above 50 indicates an increase in billings), though down from a mark of 53.7 in October. The new projects inquiry index was 58.8, following a mark of 62.7 the previous month.
Nov. 2013
Nov. 2014
ABI Score
49.8
50.9
New Projects Inquiry Score
57.8
58.8


Dodge Momentum Hits Highest Point Since 2009

After retreating from July through September, the Dodge Momentum Index has registered gains for two consecutive months, and is now 14 percent above the same month a year ago. It is at its highest level since early 2009. The Index increased to 125.0 in November, up 0.6 percent from October, 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 November increase in the index was the result of greater planning activity in the commercial sector, which rose 4 percent for the month. The increase for the overall Index was held back, however, by a 3.8-percent drop in planning activity for the institutional sector.

Dodge Momentum Index (Year 2000=100)
  Oct. 2014 Nov. 2014 % Change Nov. 2013 Nov. 2014
Dodge Monument Index 124.3 125.0 0.6% 117.9 125.0
Commercial Building 128.7 133.8 4.0% 111.5 133.8
Institutional Building 118.8 114.3 -3.8% 125.9 114.3
Source: Dodge Data & Analytics


Construction Starts Recede 4 Percent

The value of new construction starts settled back 4 percent in October to a seasonally adjusted annual rate of $589.8 billion, according to Dodge Data & Analytics. The decline followed the 10 percent increase reported in September, which was the strongest month for total construction starts so far in 2014. Both nonresidential building and nonbuilding construction lost momentum in October, while residential building posted a moderate gain given further growth for multifamily housing. During the first ten months of 2014, total construction starts on an unadjusted basis were $475.8 billion, up 5 percent from the same period a year ago.

Nonresidential building in October fell 14 percent to $195.2 billion (annual rate), following its 13 percent jump in September. The institutional building group, after especially strong activity in September, pulled back 19 percent. Educational facilities in October slipped 5 percent, easing back from earlier gains.

The commercial building group in October held steady with its September pace, reflecting a mixed pattern by project type. Store construction grew 12 percent, while office construction slipped 7 percent. Hotel construction experienced a similar decline, sliding 8 percent.

Monthly Construction Starts
Seasonally Adjusted Annual Rates, In Millions of Dollars
  Sep. 2014 Oct. 2014 % Change
Nonresidential Building $227,426 $195,153 -14
Residential Building 221,563 245,885 +11
Nonbuilding Construction 162,661 148,716 -9
Total Construction $611,650 $589,754 -4


Year-to-Date Construction Starts
Unadjusted Totals, In Millions of Dollars
  10 months 2013 10 months 2014 % Change
Nonresidential Building $149,314 $169,887 +14
Residential Building 178,713 191,308 +7
Nonbuilding Construction 125,055 114,616 -8
Total Construction $453,082 $475,811 +5
Source:Dodge Data & Analytics

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