July 30, 2013
The continued news is on the construction industry is on the rebound. The reports of progress is driven by new projects. One indicator of construction is reported by the “Architecture Billings Index Stays in Growth Mode” which reported 3.5 percent increase.
Building Online reported the complexities of The Architecture Billings Index (ABI). The ABI “remained positive again in June after the first decline in ten months in April. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the June ABI score was 51.6, down from a mark of 52.9 in May. This score reflects an increase in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 62.6, up sharply from the reading of 59.1 the previous month.”
AIA Chief Economist, Kermit Baker, PhD, Hon. AIA.” said, “With steady demand for design work in all major nonresidential building categories, the construction sector seems to be stabilizing. Threats to a sustained recovery include construction costs and labor availability, inability to access financing for real estate projects, and possible adverse effects in the coming months from sequestration and the looming federal debt ceiling debate.”
Key June ABI highlights:
Regional averages: Northeast (55.6), South (54.8), West (51.2), Midwest (48.3)
Sector index breakdown: commercial / industrial (54.7), multi-family residential (54.0), mixed practice (52.4), institutional (51.8)
Project inquiries index: 62.6
The regional and sector categories are calculated as a 3-month moving average, whereas the index and inquiries are monthly numbers.
The industry has a sustained threat within the supply chain. The construction supply chain was indelibly weakened over the long-term assault on the industry. The service gaps will need to be filled to manage production and time schedules. Despite, the lack of access to capital the loss of businesses during the downturn will effect the performance of services in the new upswing driving down quality and eventually backlogging completions. This too will shakeup the industry until there is a balance of trades people, businesses and demand for sustained economic growth.
Further, the next weakness is the slow conversion of companies to adopt and adapt sustainability construction solutions into their operations. The slow churn of resisting sustainability, green, lean and energy efficient building is bind to industry change.
- Fewer mortgages delinquent in Fort Worth-Arlington (star-telegram.com)