ABI sags in July but still trending well. The Architecture Billings Index (ABI) slipped a bit in July but was positive for the sixth consecutive month, and 10 out of the last twelve months as demand across all project types continued to increase. As a leading monthly economic indicator of construction activity, the ABI reflects the approximate nine- to twelve-month lead time between architecture billings and construction spending.
The American Institute of Architects (AIA), Washington, D.C. reported the July ABI score was 51.5 points, down from the mark of 52.6 in the previous month. This score still reflects an increase in design services (any score above 50 indicates an increase in billings).
“The uncertainty surrounding the presidential election is causing some funding decisions regarding larger construction projects to be delayed or put on hold for the time being,” said AIA Chief Economist Kermit Baker. “It’s likely that these concerns will persist up until the election, and therefore we would expect higher levels of volatility in the design and construction sector in the months ahead.”
July building permits were down month-over-month but up year-over-year. The U.S. Census Bureau reported July building permits were at a seasonally adjusted annual rate of 1,152,000, 0.1% below the revised June rate of 1,153,000, but 0.9% above the July 2015 estimate of 1,142,000. Single-family authorizations in July were at a rate of 711,000, 3.7% below the revised June figure of 738,000. Authorizations of units in buildings with five units or more were at a rate of 411,000 in July.
Oil & gas market may be waking up. New drilling activity in Texas’ Permian Basin boosted the Baker-Hughes rig count over the last week. New data at www.bakerhughes.com says the region now has 196 operating rigs in its Aug. 18 report, compared to 189 rigs the previous week (+7 rigs), an 80% decline. It’s not time to celebrate just yet, as overall drilling activity in the United States is still way down over last year, with 491 rigs in service this month compared to 885 rigs in Aug. 2015. The largest year-over-year declines are in the Eagle Ford (-63); Permian (-57); Williston (-46); and Marcellus (-28) Basins.
