January Architectural Billings Slow Declines

That title is a Jedi mind trick...yes, the American Institute of Architects' Architecture Billings Index (ABI) did slow its declines from last month, but they are still declining. The January 2021 ABI figure came in last week at 44.9, up from 42.3 in December. Bigger is better, however values less than 50 mean that billings are decreasing. The last time the ABA was above 50, meaning they were increasing, was February of last year (you know, before COVID put the United States into a state of chaos). Next month ought to be interesting. The ABI serves as an approximately nine to 12-month leading indicator for commercial building construction activity.

The ABI is way off its lows of April 2020, where it logged a dismal 29.5, yet there was another more modest decline in the last two months of 2020. This recent figure shows a positive reversal in that trend. That same post-cratering dip shows up in the project inquiries graph, but it too reversed in January 2021. 

The specific data is a collection of mixed bag results with some up from last month and others down. For the regional data, there are two advancers and two decliners. Unfortunately, I live in one of the decliners.

• Northeast: 41.9 (up from 38.8 in December)
• South: 47.4 (also up from 46.8 last month)
• Midwest: 42.2 (down from December's 43.6)
• West: 42.8 (down slightly from last month's 43.4)

For the industry sector breakdown, the decliners outnumbered the advancers 3 to 1:

• Multi-family Residential: 44.4 (down from 46.1 in December)
• Commercial/Industrial: 44.3 (the biggest decliner, down over 6% from 47.2 last month)
• Mixed Practice: 47.9 (down fractionally from 48 in December)
• Institutional: 39.9 (up from December's 38.5)

While institutional projects did not plumb the same depths as the three other sectors, it is clearly the laggard as the market corrects. The fits-and-starts of the ABI (and its subcategories) also loosely follows the Chicago Board of Options Exchange volatility index for stocks (VIX) which may suggest that billings are trending with greater economic sentiment (a theory I am wholly unable to prove/disprove but does make me wonder). Where as stock traders like volatility and the corresponding price changes, I am guessing most of us in the AEC world would prefer some stability. Hopefully the wild fluctuations are subsiding. Tune in next month for the one-year anniversary of the ABI's 38% drop to see how we have recovered since then.