The American Institute Architects’ Architecture Billings Index showed modest growth again in March, the fifth consecutive month of gains. With billings steadily increasing, and growth seen across most of the country, this month’s ABI offers more good news after the inconsistent year seen in 2011.
The Architecture Billings Index (ABI) serves as the leading economic
indicator of construction activity, and reflects the approximate 9-12 month lag
time between architecture billings, and actual construction spending. The
monthly ABI scores are centered around 50, with scores above 50 indicating an
aggregate increase in billings, and scores below 50 indicating a decline.
The ABI registered a score of 50.4 in March; once again a
modest gain over February’s values. Job inquires once again saw steady gain for
the month, with the sixth consecutive month with a score above 55. Again, all
regions except the west saw business improve, and firms in most areas of
specialization saw growth.
Firms with a residential specialization, as well as those
with a commercial/industrial specialization, both reported increasing revenue
for the seventh month in a row. Firms with a commercial/industrial
specialization have reported growth in 16 out of the last 21 months, a positive
sign that the expansion is well established in that sector. However, business
conditions remain weak for firms with an institutional specialization, despite
two months of minimal growth in late 2011 and early 2012.
Economy rising, employment still lagging
In another positive
sign, more work appears to be on the horizon. Architecture firms have reported
growth in the value of new design/design-build contracts for the last three
months. Although this measure is not seasonally adjusted, and may be partially
due to the impact of a warmer-than-average winter across much of the country,
it should still be taken as an encouraging sign. The AIA’s quarterly
measurements of firm backlogs reveal an average length of 4.6 months, the
highest they have been since September 2008.
Residential real estate activity
improved in all districts of the country, with the exception of the Cleveland
and San Francisco districts. Multifamily housing unit construction increased
across the board. In addition, nonresidential construction activity increased
in the Philadelphia, Cleveland, Richmond, Atlanta, Chicago, and St. Louis
districts, and healthcare construction expanded in the Cleveland and Chicago
districts.
Employment data
from the Bureau of Labor Statistics was more sobering, with non-farm payroll
employment adding just 120,000 new jobs in March, half the number that had been
added in each of the three prior months. One factor leading to lower numbers
was a sharp decline in retail employment. Construction employment was
essentially flat for the month, adding just 7,000 jobs, but the architectural
services sector grew to 153,200 in February (the most recent data available)
with the addition of 1,200 jobs from January. However, since this data is not
seasonally adjusted, that growth may be partially due to seasonal hiring for
the spring.
Statistics
|
By region,
the ABI breaks down as follows from January to February: Midwest is down 54.1
from 56.0, South is down 50.1 from 51.3, Northeast is up 53.9 from 51.0, and West
is up 46.6 from 45.6.
|
By market
sector: Residential is down 51.9 from 53.3, Institutional is down 47.9 from 50.3
and Commercial/Industrial is up 56.0 from 55.1.
This month, Work-on-the-Boards participants are saying:
• [We’re] currently
seeing a surge in work. However, there do not appear to be as many projects to
chase later in the year.
—Six-person firm in the South, institutional specialization
• For the first time
in four years there is a definite increase in contracted workload, and the
feeling that this could continue.
—Eight-person firm in the Northeast, commercial/industrial
specialization
• One hundred
percent of our projects are now remodels—no new construction.
—Two-person firm in the West, residential specialization
• There is a
definite increase in activity. Developer work is clearly speculative, but
plentiful. Things are improving.
—Three-person firm in the South, residential specialization
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