The AIA reported the March ABI rating was 50.5 (any score above 50 indicates an increase), down from the 55.5 mark in February. The ABI has been positive for eighteen consecutive months and twenty-seven out of the last twenty-eight months.
“While the index has leveled off a bit compared to previous scores, there are enough nonresidential projects slated to begin construction over the next several months that this month’s numbers should not be cause for concern,” said AIA Chief Economist Kermit Baker. “In terms of the nonresidential construction market, the retail, education and health-care sectors have all increased at a double-digit rate in February compared to year-ago levels.”
This news comes on the heels of the Census Bureau reporting that housing starts in March were lower than forecasted and finished with the second slowest rate over the last twelve months, behind December. Building permits, which are indicative of builder confidence, fell more than expected as well.
According to the AIA, the regional 3-month moving average was 55.3 in the Northeast, 55.2 in the Midwest, 54.1 in the South and 49.3 in the West. The breakdown by sector includes 8.8 for commercial and industrial use, 57.2 for institutional and 47.3 for institutional, according to the AIA.
“Right now the overall market is seeing the effects of higher interest rates and rising inflation, and there is some thought that growth may be slowing throughout the rest of the year,” said Michael Judd, President of Greenwich Consultants, LLC. “These factors may keep profits at a moderate level in the commercial / nonresidential markets, while the residential markets are experiencing decreasing profits and suffering from decreased demand for housing.”
The Architecture Billings Index is derived from a monthly “Work-on-the-Boards” survey and produced by the AIA Economics & Market Research Group.
