The national ABI score for September fell-back to 49.1, its first score below 50 in seven months. The ABI remained north of 50 on a 3 month moving average, (3MMA) basis. Regional monthly scores were: The South 54.0, Midwest 50.4, Northeast 56.9 and the West 48.8.
The Architecture Billings Index (ABI), is a leading economic indicator that provides an approximately nine to twelve month glimpse into the future of nonresidential construction spending activity. The results are seasonally adjusted to allow for comparison to prior months. Scores above 50 indicate an aggregate increase in billings, and scores below 50 indicating a decline.
Figure 1 presents a map of the U.S. depicting the four ABI regions. It is color coded to show expanding billings and increased growth in green and declining billings and negative growth in red. The data is shown on this map is as three month moving averages (3MMA), and 3 month year on year (y/y), percent change.
On a 3MMA basis, the U.S. ABI score was 52.7 with a 3.3% annual growth rate. The Southern zone scored the highest 3MMA ABI with 55.0, however, its growth rate was flat y/y. The Northeast recorded a 50.2, 3MMA ABI and the strongest y/y growth rate at 18.2%. The Midwest posted a 52.1, 3MMA ABI, and a 3.9% y/y growth. The Western region recorded a 3MMA of 52.2 and a 0.3% y/y growth rate.
Figure 2 charts the ABI sub-index for Commercial / Industrial and Institutional from 2016 to present. The Commercial/Industrial sub-index declined 1.2 points to 54.0 in September. The index has been greater than 50 for 20 consecutive months. The Institutional sector scored a 51.0, up 0.6 percentage point, its eleventh month in a row greater than the 50 threshold. The non-residential construction market has posted twelve month moving total growth for 68 consecutive months according to construction put in place, (CPIP) data from the U.S. Census Bureau
Table 1 lists the overall ABI and all of its sub-indexes. It presents and compares monthly and 3MMA data, showing percentage point change on both three and 12 month basis, as well as momentum. Green denotes positive change, while red indicates negative growth. National momentum, (3 month y/y subtract 12 month y/y) was positive 1.4%. Inquiries momentum was flat, while Design contract momentum was up a robust 3.5%. Regionally, momentum was mixed with two of the four zones posted positive momentum; Northeast +11.6% and West +2.8%. The South was flat, while the Midwest recorded a negative 1.7%. Multi-family residential Commercial / Industrial all recorded positive momentum. Only the Institutional project sub-index showed negative momentum, off 0.1%.
In its release today, AIA Chief Economist, Kermit Baker, Hon. AIA, PhD, quoted the following: “We’ve seen unexpectedly strong numbers in design activity for most of 2017, so the pause in September should be viewed in that context. Project inquiries and new design contracts remain healthy, and the continued strength in most sectors and regions indicates stability industry-wide.”
Overall the September ABI report indicates points to growth in the non-residential construction sector.
At Gerdau we follow the ABI because it is a leading indicator of non-residential construction activity. The ABI has a proven track record and as such it is useful for business planning purposes.