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Justin Reginato, Ph.D.
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Economic Indicators Showing an Improving Construction Industry

3/21/2013

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In the past two days, two leading economic indicators have showing continued improvement of the health of the construction industry (on top of the 48,000 new construction jobs reported earlier this month).

First is the American Institute of Architects (AIA) Architectural Billings Index (ABI).  The ABI has been steadily improving since the market bottomed out in early 2009.  February's ABI came in at 54.9, increasing from 54.2 in January (50 is the baseline; greater than 50 means that architectural billings are increasing).  The multi-family residential market was the healthiest and posted a strong gain over last month.  The Northeast was the biggest winner in terms of geographical regions.  All sectors and regions improved:

Sectors:
  • Multi-family: 60.9 (vs. 54.5 in January)
  • Commercial/Industrial: 53.3 (vs. 52 in January)
  • Institutional: 50.7 (vs. 50.2 in January)

Regions:
  • Northeast: 56.7 (vs. 50.3 in January)
  • Midwest: 54.7 (vs. 54.4 in January)
  • West: 54.7 (vs. 53.4 in January)
  • South: 52.7 (vs. 51.7 in January)

The New Project Inquiry Index (I'm not sure what that is, but it's name strongly suggests new projects) is at 64.8, it's highest level since January 2007.  You can read the entire press release here and I'll post the cool graphic AIA typically produces when they post it.

Second, it was reported today by the Wall Street Journal that plywood prices are skyrocketing (read article here).  In the past year, prices have increased 45% and suppliers are having trouble keeping up with the increased demand.  Increasing demand for plywood = more jobs using plywood = more construction activities.  This is more good news for CM students.

I have included the chart below that is maintained by Bill McBride at the Calculated Risk blog.  Is shows the price of lumber per 1,000 board-feet, in case you're interested:
Picture
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