by calculated risk March 20, 2024 10:11:00 AM
Note: This index is primarily a leading indicator for new commercial real estate (CRE) investments.
From AIA: AIA/Deltec ABI reports that construction company business slowdown slowed in February
Construction company billings continued to decline in February, with AIA/Deltec's This month's Architecture Billings Index (ABI) score is 49.5. However, February's scores showed the slowest easing in claims since July 2023, suggesting the recent economic slowdown may be receding.
“Indicators emerged this month that business confidence may finally begin to recover in the coming months. Inquiries for new projects rose at the fastest pace since November, and the value of new design contracts awarded rose. has increased at the fastest pace since last summer,“ said AIA Chief Economist Dr. Kermit Baker. „With interest rates expected to fall in the coming months, there are positive signs for future growth.“
Even though national business confidence remained weak in February, the Midwest as a region still reported an increase in bills. Midwest-based companies reported growth in the past three months and four of the past five months.
The ABI score is a leading economic indicator of construction activity and provides a glimpse into the future of nonresidential construction spending activity for approximately 9 to 12 months. This score is derived from a monthly survey of architecture firms that measures changes in the number of services provided to clients.
Emphasis added
• Northeast (44.0). Midwest (50.8); South (47.7); West (47.2)
• Sector index breakdown: Commerce/Industrial (46.1). Institutional (50.7); Mixed business (companies with at least half of their billings not belonging to other categories) (47.1). Apartment complex (44.9)
This chart shows the Architecture Billing Index since 1996. The index for February was 49.5, up from 46.2 in January. A value below 50 indicates a decline in demand for the architect's services.
Note: This includes commercial and industrial facilities such as hotels and office buildings, apartment complexes, schools, hospitals, and other facilities.
Typically, this index leads CRE investments by 9 to 12 months, so this index signals a slowdown in CRE investments in 2024.
Note that multifamily claims decreased in August 2022, marking the 19th consecutive month of negative charges. (with corrections). This suggests that Multifamily's start will be even weaker.