After remaining “buoyant” but not positive in September, it shouldn’t be any surprise that the Architecture Billings Index (ABI) numbers were, again, stagnant in October—especially given that the coronavirus pandemic is getting worse across the United States.
The figures released today by the AIA seem to show a profession stuck in neutral. The ABI clocked in at 47.5 (anything under 50 is a decline from the prior month), sliding again for the eighth consecutive month. While a tick up from September’s 47.0, technically, it’s still negative.
However, there were bright spots indicating that things could pick up in the near future. New project inquiries increased from 57.2 in September, already positive, to 59.1 in October; perhaps developers and homeowners are bullish on the economy and the future. Additionally, newly signed contracts (the design contract index) trended positive for the first time since March, increasing to 51.7 in October from 48.9 the month before.
On a region-by-region basis, things improved as well. The ABI average in the West increased to 50.4 from a dour 45.6 in September, and the Midwest almost increased, reaching 49.4 (up from the previous 45.6). In the South, the needle moved from 43.7 in September to 45.8 last month, and the Northeast continued its streak of “worst-performing region,” moving from a paltry 41.5 in September to 44.9 in October.
Sector-by-sector, multifamily residential demand actually increased for a second straight month, rising from 54.0 in September to 55.1 in October. The other two indicators fared worse, as institutional demand trended up lightly to 42.2, and industrial and commercial projects almost broke even at 48.0.
While it seems like the industry is on the verge of growth, the AIA also issued a word of caution; 60 percent of firms surveyed to compile the October Architecture Billings Index reported seeing the prices of materials noticeably increase (or availability decrease) over the last 6-to-12 months. Additionally, firms are seeing more competition than ever as they expand both their specialties and geographic area to drum up additional business.
“Though still in negative territory, the moderating billings score along with the rebound in design contracts and inquiries provide some guarded optimism,” said AIA chief economist Kermit Baker in a press release. “The pace of recovery will continue to vary across regions and sectors.”