The Architecture Billings Index (ABI) bounced back in December with a score of 52.2 after demand had slowed a bit in November, which was at 50.9, to end the year strong. This is a good sign as we moved forward in 2015 considering the December 2013 score showed a decrease in demand for design services with a score of 48.5. The ABI is a leading indicator of construction activity with construction spending typically following the ABI by nine to twelve months. (Scores above 50 indicate an increase in demand for design services and scores below 50 indicate a decrease in demand.) December marked the eighth straight month of increased demand and resulted in ten months of the year with increased demand.
The South region with a score of 56.8 continues to be the strongest region in the country and the only region to have increased demand the entire year. The West region with a score of 52.9 has had six continuous months of increased demand and the Midwest rebounded to a score of 50.8 after sinking to 49.8 in November. The Northeast region unfortunately continues to move in the wrong direction with a score of 45.5 after recording scores 47 and 46.7 in October and November, respectively.
Three of the four sectors showed increases in design activity with Institutional (52.5) and Commercial/Industrial (51.2) both posting higher scores than those recorded in November. Multi-family residential was at 55.7 and was the only sector to have increased demand every month of 2014. Mixed Practice plummeted to 45.8 after scoring 52.6 in November. Both the sector and regional scores are calculated on a moving three-month average.
The new project inquiries index and the design contracts index were both lower than they were in November. The new project inquiries index was at 58.2 for December and the design contracts index, a precursor for future ABI scores, was at 49.9.
Eight straight months of increased demand for design activity to finish out 2014 means that the construction industry should start reaping the benefits with increased construction spending activity starting early in 2015.