Architecture billings stay in positive territory for third-straight month

Dive Brief:

Demand for design services stayed positive for a third-straight month, despite falling back in April, with the American Institute of Architects' latest Architecture Billings Index coming in at 50.9 for the month, compared to 54.3 in March and 50.7 in February. The ABI is an indicator of future construction spending with a nine- to 12-month lead.
Within the index, the institutional sector saw its fourth-consecutive month of growth at a score of 54.0 in April. The multifamily residential and mixed-practice sectors, however, dropped slightly, with the multifamily category dipping below the breakeven point to a score of 49.9, and the mixed-practice segment dipping modestly to a reading of 53.4. The commercial/industrial sector rebounded in April to a score of 52.4, reaching above the breakeven point for the first time since January.
The sub-index tracking project inquiries increased to a score of 60.2 in April from 59.8 in March. Design contracts also grew modestly, from 52.3 in March to 53.2 in April.

Dive Insight:

Despite demand for design services hovering in positive territory, demand slowed in April following a strong showing in March. The slowdown follows news of a drop-off in March's construction spending and tepid employment growth in April.

Construction spending fell 0.2% from February to March to a seasonally adjusted annual rate of $1.218 trillion, marking a departure from the previous month's gains. A 1.2% uptick in private residential construction wasn't enough to make up for the month's 1.3% dip in the private nonresidential sector. Still, analysts project spending growth for the coming year, with Dodge Data & Analytics economists predicting a 5% year-over-year increase in starts totaling $712.9 billion for 2017.

Construction employment has continued on a volatile trajectory amid the ongoing labor shortage. In April, the sector added only 5,000 net new jobs. The month's total construction employment of 6.877 million represented a 173,000-position — or 2.6% — increase from April 2016.

Still, optimism in the design and construction sector could strengthen on the back of President Donald Trump's newly released budget proposal.

Released Tuesday, the outline offered a first glimpse into plans for the president's highly touted $1 trillion infrastructure proposal. According to the budget, the plan would put $200 billion into transportation projects over the next decade to generate $1 trillion in new investments in the nation's infrastructure. The administration said it would meet its $1 trillion goal through a combination of new federal investments, incentivizing private sector funding and expediting projects by eliminating or updating regulations.

However, Senate Democrats say the plan could ultimately cut $206 billion from infrastructure programs, according to The Washington Post. Senate Minority Leader Charles E. Schumer (D-NY) wrote that Trump's elimination of an Obama-era discretionary grant program that would have invested nearly $500 million in public highway and transit projects, along with around $6.2 billion in cuts to the Department of Housing and Urban Development that would focus on big-ticket community development grant programs, stand to detract from investments in U.S. infrastructure and housing development.