Demand for design services remained high in October with an Architecture Billings Index (ABI) score of 53.1. This is down just a bit from September’s score of 53.7, but still indicates a strong increase for design services since all 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 because the average lead time between billings and construction spending is between nine and twelve months. For the most part, architecture billings have increased every month with a few exceptions. January (49.9), April (48.8) and August (49.1) all had scores below 50, but none were so bad that it indicated a huge decrease in billings and each of the following months showed scores above 50.
The design contracts index score was down from September’s score of 53.2 to 51.7 in October. The new projects inquiries index was 58.5 for October, which was lower than the 61.0 in September. Both scores were above 50, so they were still showing growth in October.
The Northeast region crept ever so closer to getting back into a growth mode with a three-month average score of 49.2 in October. All other regions remained above 50 in October. The South edged up from 54.5 in September to 56.2 in October. The West improved from 51.7 to 54.4 and the Midwest dipped from 54.2 to 52.6 in October.
The three-month sector index averages had all areas back above 50 for October. Commercial/Industrial had the biggest increase going from 50.9 in September to 55.1 in October. Mixed Practice also improved from 52.6 to 54.9. Institutional dropped 0.1 points to 51.4 and Multi-family Residential climbed above 50, going from 49.5 to 52.5 from September to October.
Based on the ABI scores from the past 12 months, 2016 is going to be a strong year for construction spending. This year we are on track to surpass $1 trillion in construction spending and we should see an increase on those numbers next year with positive growth for the construction industry.