Dive Brief:
- The Architecture Billings Index started 2017 with a downturn from last month’s strong report, coming in at a score of 49.5 in January, the American Institute of Architects reported Wednesday. January's score comes on the heels of the index’s strongest performance of 2016 in December at 55.9.
- Within the index, institutional had the highest score at 54.6, followed by commercial/industrial at 53.4, and mixed-practice and multifamily residential tied at 48.1. The ABI is an indicator of future construction spending — with a lead time of nine to 12 months — as design services typically lead to new projects.
- January marked the first month of decreased demand for design services since September, though the new projects inquiry index notched up to 60.0, up slightly from a score of 57.6 in December. Any ABI score above 50 indicates a rise in billings.
Dive Insight:
The report falls in line with a December slowdown in construction spending that followed an eight-year high in November. Still, AIA Chief Economist Kermit Baker said the lower ABI readings weren’t cause for concern, noting that the groundwork for a strong nonresidential design and construction market are in place.
Although overall spending figures for 2016 slightly trailed analyst predictions, industry observers have forecast construction growth in the coming months. Baker noted in a previous release that December’s figures made it an "atypical month," and said he was looking to the next few months to offer clarity on the industry’s prospects.
Part of the atypical report could be attributed to a post-election "Trump bump" that may ripple out into the market as the new administration settles in. The construction industry, overall, has welcomed Trump’s victory, rallying around his development experience, campaign promises to reduce regulations and a $1 trillion infrastructure plan that remains stalled in partisan gridlock amid funding disagreements.
Despite Congressional infighting over finances, industry leaders hope the construction of the U.S.-Mexico border wall and the Keystone XL and Dakota Access pipelines, along with a directive to fast-track the country’s future infrastructure needs could be a boon to the industry in the coming years.
