The latest report from the AIA indicates a strong end for 2016, with three consecutive months of growth in design billing contracts, and a high billings score not seen since before the recession.
The monthly Architecture Billings Index (ABI) came in at a score of 55.9 in December, up 5.3 points from November’s 50.6, the American Institute of Architects announced today.
The ABI is a leading economic indicator of construction activity in the U.S., and reflects a nine- to 12-month lead time between architecture billings and construction spending nationally, and regionally, as well as by project type. A score above 50, like this month, represents an increase in billings from the previous month, while a score under 50 represents a contraction.
The significant growth in billings does not come as a surprise, as the new project inquiries index, the most reliable indicator of future billings, soared to a score of 59.5 in November—4.1 points higher than a month prior. December’s report benchmarks the highest architecture billings score seen since July 2007, when billings reached a score of 56.7.
“The sharp upturn in design activity as we wind down the year is certainly encouraging. This bodes well for the design and construction sector as we enter the new year”,” said AIA Chief Economist, Kermit Baker, Hon. AIA. “However, December is an atypical month for interpreting trends, so the coming months will tell us a lot more about conditions that the industry is likely to see in 2017.”
The design contract portion of the index also ended 2016 on a high note, rising one point to a score of 51.2, and marking the third consecutive month of growth. Billings are likely to ease in January, as project inquiries Regional billings, which, unlike the national score, are calculated as a three-month moving average, increased in three of four regions during December. After 11 consecutive months with the highest score, billings in the South—with a score of 53.8 —were finally surpassed by both the Midwest and the Northeast, with scores of 54.4, and 54.0, respectively. The only region to see a contraction in billings was the West, with a score of 48.8.
Architecture billings increased in all but one sector during December, with billings in the multifamily residential sector dropping 1.3 points to a score of 50.6. The commercial/industrial sector posted the highest score of the month, while the institutional sector posted the biggest increase, from 51.8 in November to 53.3 in December. (Results of the sectors and regions are calculated as a moving average of the past three months.)