The AIA's monthly Architecture Billing Index reported a score of 52.6 for June, the fifth straight month that the index has remained positive, the Institute announced today. This mark is modestly lower than the 10-month high of 53.1 in May, but is still among the highest scores seen in the past year. The ABI is a leading economic indicator of construction activity in the U.S. reflecting the nine- to 12-month lead time between architecture billings and construction spending nationally and regionally as well as by project type. A score above 50 represents an increase in billings from the previous month (a score under 50 represents a contraction).
“Demand for residential projects has surged this year, greatly exceeding the pace set in 2015. This suggests strong future growth for housing in the coming year,” AIA chief economist Kermit Baker, Hon. AIA, said in a press release.
Architecture firms surveyed by the AIA reported lower levels of growth in all three components in June compared to May. Billings and architecture inquires both saw a slight drop from 53.1 to 52.6, and from 60.1 to 58.6, respectively. Most hit was design contracts, plunging below 50 to 49.7 from 52.8, a two-year low.
“While we expect to see momentum continue for the overall design and construction industry in the months ahead, the fact that the value of design contracts dipped into negative territory in June for the first time in more than two years is something of a concern,” Baker said.
Regional markets reported mixed results, as three out of four regions churned out record-high scores. The South and Northeast rose to 55.5 and 51.8, respectively, both highs not reached in more than a year. The West reported a strong 54.1 in June, the highest level since September 2013. The Midwest, however, continued to see its index ebb, from May's downward-revised 48.9 to June's 48.2.
The multifamily residential sector was the best-performing sector in June, reaching a two-year high of 57.9. Close behind were institutional and mixed practice, standing at 52.7 and 51.0, respectively. Commercial/industrial, with a reading of 50.3, was the only sector that slowed from the previous month but remained above 50, meaning it still experienced growth, just at a slower pace.