April’s ABI national overall score of 52.0, up 1.0 point from March’s 51.0 but still well into the expansionary zone, (>50). Although business conditions in the Midwest and Southern weakened, it remained strong in the Northeast and West regions. The new projects inquiry index came in at 56.7, down 1.4 points from last month, while the new design contracts index decreased 1.4 points to 50.1. Regional monthly scores were: South 51.8, West 55.1, Midwest 49.6 and Northeast 50.3.
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 national ABI score was 51.7 with a decrease of 0.5% y/y. The Western region posted the highest 3MMA of 55.3 and a strong annual growth rate of 9.7%. The Southern region’s 3MMA ABI was 52.7, with a decrease of 2.2% y/y. The Midwest zone scored a 50.9, 3MMA, its annual growth rate was -3.7% y/y. The Northeast recording an ABI of 49.4 3MMA with an annual growth rate of -2.4%.
Figure 2 charts the ABI sub-index for Commercial / Industrial and Institutional from 2016 to present. The Commercial/Industrial sub-index increased by 0.8 point month on month to 52.7 in April. The good news is that the index has now been greater than 50 for 27 consecutive months. The Institutional sector is trending upward, scoring a 52.0, up 0.2 points m/m.
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 slightly negative, at -0.5%.
Inquiries momentum was negative 4.1%. Design contract momentum declined 5.6%. Regionally, momentum was positive for one out of the four regions; The Northeast recorded negative 4.9% momentum, while the Midwest recorded a negative 4.7% momentum. The South’s momentum was negative 2.2% as the West posted momentum was positive 3.3%. Momentum for the remaining project categories were negative: Multi-family residential, (-1.5%), Commercial / Industrial, (-1.5%), Institutional, (-2.1 %) and Mixed-use, (-4.7%).
In its release today, AIA Chief Economist, Kermit Baker, Hon. AIA, PhD, quoted the following:
“While there was slower growth in April for new project work coming into architecture firms, business conditions have remained healthy for the first four months of the year. Although growth in regional design activity was concentrated at firms in the Sunbelt, there was balanced growth so far this year across all major construction sectors.”
At Gerdau we follow the ABI because it is a leading indicator of non-residential construction activity with an approximate 12 month lead-time to ground-breaking. The ABI has a proven track record and as such it is useful for business planning purposes.