- Demand for design services pivoted in September, breaking from its upward path for the first time in seven months, coming in at a reading of 49.1 on the American Institute of Architects’ latest Architecture Billings Index. The ABI is an indicator of future construction spending with a nine- to 12-month lead time. That figure scored 53.7 in August and 51.9 in July
- Within the index, the commercial/industrial sector dipped to 54 in September, down from 57.6 in August. The institutional sector bounced back slightly, inching up from 50.1 in August to 51 in September, while the multifamily segment continued its slide, dropping from 53.8 to 51 for the period. Mixed-practice remained relatively stable month-over-month, edging down from 52.5 in August to 52.2 this month.
- The sub-index tracking new project inquiries also changed course, falling from 62.5 in August to 59 in September. New design contracts continued to decrease, slipping from 54.2 to 52.9 for the month.
Despite a slight moderation in architecture billings this month, the year’s overall demand for design services has seen strong activity, with the measure holding in positive territory since February. Analysts expect that activity to remain robust, with September’s report showing strong readings in new project inquiries and new design contracts.
Positive employment and construction spending reports point to health in construction activity in the coming months. Although industry job growth slowed in September, adding only 8,000 positions to its payrolls, that number was likely impacted by rebuilding efforts in the South following the billions of dollars in damage left by Hurricanes Harvey and Irma. The month’s report, according to the Associated Builders and Contractors, doesn’t provide a sure picture for basing future economic decisions, as the industry will likely see employment grow as rebuilding efforts begin in the southern U.S. and areas affected by California’s wildfires.
Increased construction spending, too, stands to bolster demand for design services. Although those numbers have steadily declined since March, the measure will likely gain momentum as construction crews begin rebuilding efforts in the South full force.
Still, a continued downturn in commercial construction activity reported by the Dodge Momentum Index could point to a slowdown in future activity. Despite that slump, construction could still finish out 2017 on a high note, with Dodge forecasting starts values to notch up 5% from the year before to $712.9 billion for the year. As of July, construction starts were pacing at an annual rate of $728.1 billion.