July’s ABI Shows Strong Demand For Design Services

Coming off June’s eight-year high of 55.7, the Architecture Billings Index (ABI) score in July of 54.7 continues to show strong demand for design services. (Scores above 50 indicate an increase in billings and scores below 50 indicate a decrease.) The ABI acts as a barometer for future nonresidential construction spending since the lead time between billings and construction spending is between nine and twelve months.julabi2015

Both the design contracts index and new projects inquiry index continued to show increases. The project inquiries index was up to 63.7 in July over June’s score of 63.4. The design contracts index jumped up two points from 52.5 in June to 54.5 in July.

The three-month regional averages improved for all regions and architecture billings increased in all regions. The Northeast (53.5) had its second consecutive average of increased demand for design services after being at 50.4 last month. The Midwest (58.2) continues to remain the strongest region, rising a point over last month’s score of 57.2. The South (55.7) and the West (53.8) both had solid, healthy score and increased from last month’s readings of 54.9 and 50.7, respectively.

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The sector index breakdown shows that Multi-family Residential (49.8) inched a little bit closer to getting above the 50 mark. All others sectors showed an increase in billings with Institutional (57.4) dropping a bit from last month’s reading of 59.1. Commercial/Industrial (53.4) and Mixed Practice (56.8) both had significant increases from last month.

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As we close out the second half of the year and head into 2016, nonresidential construction spending should remain strong based on what we’ve seen from the ABI so far this year as some of those long-term projects on hold finally start to come to fruition.

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