Architecture billings rebound in October

Dive Brief:

Demand for design services bounced back in October, coming in at a reading of 51.7 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 49.1 in September and 53.7 in August.
Within the index, the commercial/industrial sector declined to 51.2 in October, down from 54 in September. The institutional sector also edged down, decreasing from 51 in September to 50.7 in October, while the multifamily segment continued its slide, dropping from 51 to 50.7 for the period. Mixed-practice fell from 52.2 in September to 50.7 for the month.
The sub-index tracking new project inquiries inched up in October, rising from 59 in September to 60.2 this month. New design contracts remained relatively stable month-over-month, dropping to 52.8 from September's reading of 52.9.

Slight increases in the report's new project inquiries and new design contracts readings point to robust activity in the coming months.

Mary Tyler March/Construction Dive, data from American Institute of Architects

Dive Insight:

Although September's reading marked a change of pace for an otherwise strong year of demand for design services, October's figures put the measure back on a positive track. Slight increases in the report's new project inquiries and new design contracts readings point to robust activity in the coming months.

Relatively stable employment and spending figures also bode well for future activity. October notched an additional 11,000 net new jobs, with specialty trade contractors across the residential and nonresidential sectors driving that growth. Though the month's employment figures represented a slight increase from September, a slowdown in job growth, particularly in the nonresidential sector, could point to trouble in the industry's inability to find and recruit enough qualified workers.

Recent spending reports also suggest a positive outlook in demand for design services. September's figures showed slight overall growth, marking a 2% increase from the year before. Though spending has trended downward steadily since March, the measure will likely continue to pick up as rebuilding efforts following a spate of hurricanes across the South and wildfires in California begin to ratchet up.

Construction activity is expected to finish out strong for the remainder of the 2017, with Dodge Data & Analytics predicting a 5% increase in starts values from 2016 to $712.9 billion for the year. By July, starts had been pacing at an annual rate of $728.1 billion.