Construction Econ Update: Material Prices are Up, But So Is the ABI

The most recent ABI data just dropped, but first an update on material prices. Materials for non-residential construction are up 4.7% year-over-year. Softwood lumber is up 14.5% which was discussed a couple of weeks ago. Crude oil was the largest gainer at 30.3% y-o-y, meaning the cost of gasoline and diesel is climbing.

OK, let's move on to my favorite leading indication: ABI. Per my usual explanation, 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.
For January, the ABI came in at 54.7, a sharp up-tick from the previous month's adjusted 52.8 figure.

The regional breakdown for January 2018 goes like this:

• West: 56.2 (up sharply from 53 in December)
• Northeast: 47.3 (down from 49.4 in December)
• South: 55.3 (down a point from last month)
• Midwest: 54.3 (versus 52.9 in December)

Looking at the ABI figures by building type, we have the following:

• Multi-family Residential: 56 (up slightly from 55.4 in December)
• Commercial/Industrial: 53.3 (down slightly from 54.8 in December)
• Mixed Practice: 50.1 (also down slightly from 50.4 in December)
• Institutional: 52.5 (up one point from last month)

The project inquiries index was down slightly in January at 61.1 from 61.9 in December. All in all, good numbers unless you work in the Northeast.