August’s ABI national overall score of 47.2 was down 2.9 points from July’s 50.2, which is slightly under the expansionary zone, (>50). U.S. architecture firms specializing in commercial and industrial facilities likewise reported a drop in design activity in August, coming on the heels of a significant downturn in July. Firms concentrating in the multifamily either residential or institutional sector reported some modest gains in August.
The new design contracts index decreased by 1.1 points to 47.9. Regional monthly scores were South 48.2, West 51.2, Midwest 46.4 and Northeast 49.1.
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 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 negative 3.0% while Design contract momentum was negative 4.6%. Regionally, two zones posted positive momentum ranging from 0.5% in the Northeast to 6.1% in the West. Multi-family residential, Commercial / Industrial and Institutional all recorded negative momentum.
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.