Architecture Billings Increase (but...)

It is Friday, so let's start with some good news: the American Institute of Architects (AIA) Architecture Billing Index (ABI) rebounded from last month's beyond dismal 25.1 figure up to 32 for May 2020. The bad news: 32 is still pretty bad (OK, it sucks...). Hopefully this is a turn in the right direction, though. As a reminder, ABI is a leading indicator of commercial building construction by approximately nine to 12 months. A value greater than 50 means that architecture billings are increasing; any value less than 50 means billings are decreasing, which is the case for the past few months. The overall ABI is as follows:

Notice the sharp uptick in May. Hopefully it is not a dead cat bounce. As for the regional breakdown:

• West: 36 (the best regional figure but down from April's 38.1)
• Northeast: 25.1 (the worst regional, but also up from last month's nauseating 23)
• South: 30.6 (down from 31.1 in April)
• Midwest: 29.7 (down from 32.2)

The Sector Averages for May 2020 are as follows:

• Multi-family Residential: 34.8 (a nice rebound from 30.3 in April)
• Commercial/Industrial: 24.8 (down sharply from 27.8 last month)
• Mixed Practice: 28.5 (down from April's 29)
• Institutional: 35.7 (down from last month's 36.1)

It is unwise to call a trend based on the two most recent monthly data points, so I will just state that I hope that the bottom has been reached. Given the uptick in COVID-19 cases in the South, the region that has been the strongest in the construction industry for much of the past decade, I am worried that we are still far away from a V-shaped recovery in construction in spite of pent up demand.