Architecture Billings End 2020 with a Decline

If I could impose a New Year’s resolution on the design and construction industry, it would be for more work in 2021. Imagine my disappointment upon opening the American Institute of Architects (AIA) press release showing a decline in Architecture Billings Index (ABI). Then it dawned on me…this decline occurred in December. For the time being, the resolution is intact. Whether we should hold our collective breaths is debatable, but I hope we have purged the declines and are leaving them in 2020. The ABI for December was 42.6, a sizable decline from November’s 46.3. The AIA publishes the ABI as am approximately nine to 12-month leading indicator for commercial building construction activity. A value greater than 50 means that architecture billings are increasing; any value less than 50 means billings are decreasing. ​

Two very minor bright spots and two big losses in the regional indices:

• Northeast: 38.8 (up from 38.7 in November…any increase is good news)
• South: 46.8 (up from 46.7 last month. See previous bullet point)
• Midwest: 43.6 (down steeply from December’s 50.1. I blame the Packers losing in the playoffs. That’s how statistics works, right?)
  
• West: 43.4 (also down sharply from 48.3 in December. Blame it on the Rams?)

There’s one bad actor among the building types and it’s a bit unexpected:

• Multi-family Residential: 46.1 (down sharply from 52.2 in November, the second largest sector decline behind the Midwest. Not sure we can blame the Pack for this one)
• Commercial/Industrial: 47.2 (down slightly from 47.5 last month)
• Mixed Practice: 48 (down from 49.5 in November)
  
• Institutional: 38.5 (down from November's 41.9)

​The multi-family decline is particularly noteworthy. That sector has been the strongest for several years and responded rather well after cratering to an ABI of 30.3 in April as the COVID-19 pandemic was gripping the world. As is true for all data, one point does not signify a trend so no need to panic yet, but I’m very curious about next month’s number.
 
One last point: I bring up project inquiries every so often in these posts and December’s figure of 52.4 is curious. Not only is it above 50, but it increased (albeit slightly) from 52 in November. Before everyone gets too excited, the inquiries are just that: people inquiring about projects. Not much more than kicking the tires on an idea for a project. Additionally, the average inquiry index going back to January 2012 is 58.3, so 52.4 for December is comparatively shabby. All that said, the number of inquires is growing (signified by an index of greater than 50), so the interest in projects is there. I may be trying to generate optimism where it doesn’t exist, but I do see that as the silver lining in an otherwise dismal month. And technically, the ABI New Year’s resolution is still intact…fingers crossed for January.