The American Institute of Architects issued a press release today titled "Substantial Decline in Architecture Billings" which shows that the AIA's Architecture Billing Index (ABI) fell from 50.1 in July to 47.2 in August. This is the largest drop since it fell from 55.9 in December 2016 to 49.4 in January 2017. Project inquiries dipped slightly from 54.9 last month to 54.5 yet the Design Contract Index fell from 49 in August to 47.9. Ouch...Per my usual spiel, 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. Last month I wrote "The economy is slowing, but it's not slow." It appears to be slowing faster than I expected. Again, no need for a full-blown panic, awareness of a slowdown is warranted. 

Here's is the regional breakdown for August 2019:

• West: 51.2 (same as last month)
• Northeast: 49.1 (up from last month's 48.3 but now at six months in a row of sub 50 performance)
• South: 48.3 (down fractionally but now two months in a row of sub-50 results)
• Midwest: 46.4 (Down from 48.9 in July. Only the Pittsburgh Steelers had a worse month.)

With a record four tower cranes up in Sacramento, I'm making a ruling that we're carrying that positive West ABI.

Sector Averages for August 2019:

• Multi-family Residential: 50.5 (down slightly from 50.6)
• Commercial/Industrial: 46.9 (versus 49.2 in July and 52.3 in June. No bueno.)
• Mixed Practice: 46.3 (down from 48.9 in July and 54.3 in June. Hey Commercial/Industrial, hold my beer.)
• Institutional: 50.6 (up from July's 49.8 and the first return to the right side of 50 since February)

This was the worst month since I started tracking the ABI January 2012. Contractors still have 8+ month's of backlog, so it's not dire, but whew this month was pitiful.

The graphic below is cobbled together from two indicators I like to follow and an article published today in Business Insider. On the left is the JLL office clock. It shows New York as entering the "falling phase" in terms of rents. The middle graphic is from the Business Insider article stating that NYC luxury real estate had its slowest month in six years. On the right are the AIA Architectural Billing Index results from last month (click here for my explainer). 

These pieces of evidence are not entirely related. The JLL clock is for commercial properties. The BI article is for multi-family properties and the Northeast ABI and Multi-family Residential ABI numbers include data that extends beyond NYC. However, if you combine them and include the recent data that reveals that New York City had a decline of commercial construction starts (which includes both commercial and multi-family projects) of 8% over the fist half of 2019 and the signs point to an almost unmistakable slowdown in NYC construction activity.