Builder blog

Current events and commentary regarding the construction industry. Opinions are my own.
Justin Reginato, Ph.D.
  • About
  • Builder Blog
  • Tacos & Tower Cranes
  • In the News
  • For CM Students

AIA ABI Still Hanging ON and Design Work Accelerating

9/29/2014

0 Comments

 
I'm about a week late with this, but the AIA Architectural Billing Index (ABI) is still moderately strong even though it's down from last month's blowout results. If this is your first time at this blog, here's some background: the ABI records architectural billings on commercial building projects. Any value greater than 50 means that architecture billings are increasing; conversely, any value less than 50 means billings are decreasing. The ABI is a leading indicator of commercial building construction by approximately nine to 12 months. Without further ado, here are the results:

Regional (three month moving) Averages for July 2014:
  • Northeast: 53.0 (down from 55.5 in July but strongly above 50)
  • South: 55.1 (a wash from July's figure. The South keeps trucking along)
  • Midwest: 52.5 (versus 54.1 in July, a decline I'm watching because the Midwest has been weak)
  • West: 51.0 (versus 53.5 in July, a strong downward move that concerns me due to where I live and my students find work)

Three out of four declined. Ouch, but not unexpected after last month's huge increases.

Sector Averages for July 2014:
  • Multi-family Residential: 58.1 (versus 56.5 in July; this sector continues to lead the ABI and seems unstoppable)
  • Commercial/Industrial: 50.4 (versus 51.2 in July)
  • Mixed Practice: 57.1 (versus 61.0 in July, an unhealthy move downward)
  • Institutional: 54.0 (versus 53.3 in July, the only moderate bright spot outside of multi-family)

Project inquiries were down to 62.6 (from an astonishing 66.0 in July). The new measure, Design Contracts Index (which, according to AIA highlights trends in new design contracts at architectural firms) clocked in at 56.9 in August (up strongly from 54.9 in July). According to Kermit Baker, AIA's chief economist, "One of the key triggers for accelerating growth at architectural firms is that long-stalled construction projects are starting to come back to life in many areas across the country." If those moth-balled projects require additional design, that could explain the increase in new design contracts among declines in many of the other data points. The declines should not induce panic. The numbers are still overall pretty good and we're above 50 across the board, so things are improving.


0 Comments

Construction Industry Adds 20k jobs

9/14/2014

0 Comments

 
The construction industry added 20,000 jobs in August, which is good news in spite of the fact that the 142,000 total jobs created during the month was considered disappointing. According the Ken Simonsen, Chief Economist for the Associated General Contractors of America, year-over-year construction employment increased in 223 U.S. metro areas, decreased in 72 metro areas, and was static in 44. In some areas, companies are finding it difficult to find skilled labor. Perhaps the shortage of labor will increase wages, which were flat (aggregated for the entire U.S.) from July to August.

Picture
Picture
0 Comments

Stable Economy and Pent-up Demand May Spur Construction

9/4/2014

0 Comments

 
Check out this article: "U.S. is Entering the Next Couple of Years with One Distinct Advantage". It's a bit wonky if you don't have an interest or background in economics, but here's the Cliffs Notes version:
  • Domestic production of oil is keeping prices stable (in spite of the continued instability in the Middle East).
  • Production of domestic energy increases the export/import ratio for the United States, which keeps inflation in check.
  • Modest price increases in "all items" (those included in the Consumer Price Index) associated with modest inflation will allow the U.S. Federal Reserve to slowly raise interest rates.
  • Compound the increase in the Fed rate (which happens with an improving economy and increases the costs associated with financing projects) AND a shortage in qualified labor due to a decrease in the unemployment rate (which will increase labor costs will lead to higher construction costs), will motivate owners to...
  • Pull the trigger on new construction.

There is pent-up demand for capital projects, whether new offices, factories, etc. on the private side or infrastructure on the public side. Corporations have been hoarding cash and issuing bonds for even more cash because of the low interest rate environment. At some point they will have to deploy that cash. And given the need for capital facilities and the specter of rising construction costs, now is a pretty good time to break ground on new projects. Given the increasing ABI reported a few weeks ago, we could be on the cusp of a significant increase in construction activity.
0 Comments

    Archives

    November 2022
    October 2022
    September 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    September 2019
    August 2019
    September 2018
    June 2018
    April 2018
    March 2018
    February 2018
    January 2018
    March 2016
    February 2016
    January 2016
    November 2015
    February 2015
    December 2014
    November 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014
    December 2013
    November 2013
    October 2013
    July 2013
    April 2013
    March 2013
    February 2013
    January 2013
    December 2012
    November 2012
    July 2012
    May 2012
    April 2012
    February 2012

    Categories

    All
    Economics
    Real Estate
    Technology

    RSS Feed

Powered by Create your own unique website with customizable templates.
  • About
  • Builder Blog
  • Tacos & Tower Cranes
  • In the News
  • For CM Students