It's been a bit all over the place this year, so it's difficult to determine whether an eight-year high for American Institute of Architects (AIA) Architectural Billings Index – a leading indicator of construction activity, reflecting a nine to 12-month lead time between architectural billings and construction spending – denotes additional momentum in the industry's recovery, or something more anomalous in nature.
Time will tell, but AIA reported a June ABI score of 55.7, up substantially from a score of 51.9 in May. More surprising, the Midwest led all regions with a score of 57.2 – its highest in recent memory. By comparison, the South scored 54.9, followed by the West with 50.7 and Northeast with 50.4. An ABI score of 50 or more denotes growing demand for design services.
AIA attributes the increase to segments that have been relatively quiet the past year or so, including educational, health care, public safety and government buildings. The industry also is playing “catch up from slow growth earlier this year” says AIA chief economist Kermit Baker, who notes, “This is the first month in 2015 that all regions are reporting positive business conditions and, aside from the multi-family housing sector, all design project categories. “The demand for new apartments and condominiums may have crested, with index scores going down each month this year and reaching the lowest point since 2011.”
You wouldn't know it in the Midwest, particularly Chicago, where 3,000 multi-family units are due to come on line this year, followed by 5,000 in 2016.
In general, the Midwest may be benefiting from pent-up demand across several sectors, since the region long played laggard to other parts of the nation in economic and consruction industry recovery. Both Associated General Contractors chief economist Ken Simonson and Associated Builders and Contractors chief economist Anirban Basu agree regional onstruction activity should maintain pace with the nation as a whole this year. Been awhile.