Last Wednesday’s Architectural Billings Index (ABI) was the latest in a series of reports and data sets bringing about increased optimism with regard to the near-term outlook for non-residential construction in the United States.
Unlike in Canada, where building permit data indicates that the pace at which new work in non-residential construction has picked up substantially over recent months even with a drop back in June, an apparent recovery toward the end of last year in the pace at which new commercial and public sector building work is coming in has petered out in the past few months in the US.
Recent data, however, has been greeted with optimism on the part of some commentators.
The ABI itself, widely considered to be a reliable indicator of likely spending and investment in non-residential construction nine to 12 months in advance, is leading that charge. At 48.7 in the month of July, the ABI remained marginally below the 50.0 level separating increasing levels of architectural billings from decreasing levels of billings, but was well up on June’s reading of 45.9 – meaning that while billings remained in decline last month, the pace of that decline moderated considerably.
Furthermore, the new projects inquiry index was rose from 54.4 to 56.3, meaning that not only is the pace at which new architectural work is coming in gathering momentum, but also that the magnitude of this pickup has increased.
AIA chief economist Kermit Baker says that as long as overall economic conditions continue to improve, the modest declines in design activity at the moment should ‘shift over to growth’ in coming months.
Baker is not the only one offering an upbeat assessment, nor is the ABI the only positive sign.
On the back of an increase in Associated Builders and Contractors’ (ABC) Construction Backlog Indicator (CBI) – which put the national backlog average among construction firms as at June 30 at a healthy 7.7 months – ABC chief economist Anirban Basu is also becoming increasingly optimistic.
On top of the CBI figures, Basu is encouraged by recent falls in prices for building materials, especially iron and steel, saying this will translate into more attractive pro-formers and make it more likely that a given project will get the go-ahead.
For the first time in several months, Basu says ‘[a] more robust recovery in non-residential construction spending is conceivable.’
To be sure, conditions in the US construction industry remain subdued, and no one is talking about any form of imminent boom or period of high activity, but commentators are becoming increasingly optimistic about a recovery of modest sorts.