Architectural Billings Index Softens in April
Despite a decrease in architecture billings in April, firms remain optimistic about future projects in 2023 and beyond, reports the American Institute of Architects (AIA). Their optimism stems from an expected project slowdown in construction projects, which should alleviate some costs, the AIA states in its monthly Architectural Billings Index (ABI).
The ABI is a leading economic indicator that leads nonresidential construction activity by approximately 9-12 months. Any score below 50 indicates a decline in billings.
April’s ABI fell from 50.4 in March to 48.5 in April. Firms reported that inquiries into new projects accelerated slightly to 53.9, while most firms reported a decline in the value of new design contracts (49.8).
Uncertain Economic Conditions Affect Dodge Momentum Index
The Dodge Momentum Index (DMI) declined by 5.1% to 180.9 in April from March’s revised score of 190.6. Additionally, the commercial component of the DMI fell by 8%, and the institutional component improved by 0.3%.
The decreases coincide with declining economic conditions and ongoing banking uncertainties, states Sarah Martin, associate director of forecasting at Dodge Construction Network (DCN).
The DMI is a monthly measure of the initial report for nonresidential building projects in planning, shown to lead construction spending for nonresidential buildings by a full year.
DCN officials report that commercial planning in April declined because of sluggish office, hotel and retail activity. Though institutional planning improved slightly in April, it remained relatively flat due to weak education planning.
Pullback in Manufacturing Contributes to Decrease in Project Starts
The number of total construction starts fell in April following a 19% increase in March, reports Dodge Construction Network. The organization’s monthly industry indicator states that total construction starts fell by 4% in April to a seasonally adjusted rate of $1.04 trillion. A sharp drop in manufacturing project starts contributed to the decline.
Nonresidential building starts experienced a significant decline of 22% in April, reaching a seasonally adjusted annual rate of $383 billion. Manufacturing starts dropped by 68% in April. Furthermore, institutional starts decreased by 13% due to reduced healthcare construction.
Residential building starts increased 12% in April to a seasonally adjusted annual rate of $373 billion. Single-family and multifamily starts remained strong, increasing by 14% and 10%, respectively.
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