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ABI Halts Two-Month Losing Streak With Gain in October11-21-16 | Economic News

ABI Halts Two-Month Losing Streak With
Gain in October

Report Bodes Well for Nonresidential Construction Industry

The Architectural Billings Index gained 2.4 points in October, after losing ground in each of the previous two months. With a reading of 50.8, the ABI also moved back above its all-important benchmark level 50.

After contracting for two straight months, the Architectural Billings Index rebounded strongly in October, moving up to 50.8 from 48.4 in September. The ABI was at 49.7 in August.

The ABI is a significant report for the nonresidential construction industry, because it is an indicator of future construction spending, with a lead-time of about nine to 12 months. The American Institute of Architects maintains the ABI.

Participating architecture firms were asked whether their billings increased, decreased, or stayed the same in October, compared to September. The results are compiled into the ABI. Scores above 50 indicate an aggregate increase in billings, and scores below 50 point to a drop. September marked the first time since mid-2012 that the ABI had two consecutive months of declines. But the index gained 2.4 points in October and has moved back into positive territory once again.

"There was a collective sense of uncertainty throughout the design and construction industry leading up to the presidential election," said Kermit Baker, chief economist for the AIA. "Hopefully we'll get a sense of what direction we will be headed once we get a clearer read on how the new administration's policies might impact the overall economy as well as the construction industry."

The AIA's new projects inquiry index was at 55.4, down sharply from a reading of 59.4 in September. The design contracts index, which measures authorizations to proceed with design activity, slipped 2.7 points during the month to 48.7.

Regional ABI averages: South (53.7); West (49.7); Northeast (47.3); Midwest (46.8). Billings in the South grew in October, and its index has remained above 50 for more than four years, the Wells Fargo Economics Group said. The Midwest posted its lowest mark in 10 months, falling 3.3 points to 46.8.

By sector, residential multifamily improved in October, while commercial/industrial, institutional, and mixed billings were weak, according to Wells Fargo's economic team. "The weak trend suggests some slowdown in construction activity is imminent in the coming year. However, the American Institute of Architects noted the recent slate of lackluster scores is likely due to uncertainty around the presidential election."