Dive Brief:
- The American Institute of Architects (AIA) reported a drop in the Architecture Billings Index (ABI) from 54.7 to 49.1 in August.
- The Northeast and West regions came in the lowest on the ABI at 46.8 and 50.2 respectively, while commercial/industrial (49.7) and multi-family residential (49.5) were the poorest-performing sectors on the index.
- The ABI is a leading indicator of commercial construction activity, and a number below 50 on the index indicates a decrease in design services.
Dive Insight:
Although this is the second consecutive fall for the ABI, AIA Chief Economist Kermit Baker called the downward movement a "temporary step backwards" in a several-year period of sustained growth.
"The fact that project inquiries and new design contracts continue to grow at a healthy pace," Baker said, "suggests that this should not be a cause for concern throughout the design and construction industry."
Baker cites volatility as a reason for the up-and-down of the index, and indicates that high material costs and labor shortages are contributing to the lack of billings.
According to an Associated General Contractor (AGC) July-August survey, 86% of construction firms reported difficulty in filling construction positions.
In addition, hundreds of thousands of immigrant workers who left the U.S. during the housing crisis have not returned, creating an even greater likelihood that the construction labor shortage will continue into the foreseeable future.
