The January Architecture Billings Index (ABI) score of 49.6 reflects a slight decrease in demand for design services to start the year. This is a bit of a letdown after finishing out 2015 with a score of 50.9 in December that was revised up to 51.3. The revision is due to the American Institute of Architects (AIA) making updates to the seasonal factors used to calculate the ABI scores. The ABI is one of the leading economic indicators for future nonresidential construction spending and activity, the average lead time between billings and construction spending is typically nine to twelve months.
The new project inquiry index dropped to 55.3 in January, down from 60.5 in the previous month. The design contracts index also edged down ever so slightly from 51.0 in December to 50.9 in January.
There were some big changes in the three-month regional averages in January. For the regional averages, The West and South both dropped again, but still managed to remain above 50. The West went from 53.7 in December to 50.8 in January and the South dropped down to 50.3, down from 53.3 the previous month. The Midwest climbed up from 46.1 to 49.8 in January, just shy of the 50 mark. The Northeast was the big winner jumping all the way up to 50.4 and back into positive terrain after being at 46.7 in December.
Looking at the sector averages, Institutional slid just below 50 with a score of 49.9, the previous three-month average was 52.2. Commercial/Industrial and Mixed Practice both rebounded from the nosedive they took in December. Commercial/Industrial moved up from 47.3 to a score of 50.5 in January and Mixed Practice edged up to 49.0 after a three-month average of 46.5 the previous month. Multi-family Residential dropped a point in January, going from 52.9 to 51.9, which was the highest score for all sectors.
There’s no reason to hit the panic button right away despite the dip in January. We saw the same thing happen last year. January 2015 dropped to 49.9 after being at 52.7 in December. That was followed by two months of increases back into positive demand for design services. Overall demand for design services was strong the past two years and that trend should continue in 2016 as construction is expected to see continued growth over the next couple of years.