Demand for design services rose for the sixth-straight month in July, though growth slowed somewhat, with the American Institute of Architects' latest Architecture Billings Index coming in at 51.9 for the month, compared to 54.2 in June and 53 in May. The ABI is an indicator of future construction spending with a nine- to 12-month lead time.
Within the index, the commercial/industrial sector climbed to 55.4 in July, up from 52.1 in June. The institutional sector moderated from 52.6 in June to 52 in July, while the multifamily segment decreased from 57.1 to 55.8 for the period. Mixed-practice dropped into negative territory, falling from 53.8 to 48.4 in July.
The sub-index tracking new project inquiries made up some of the ground it lost in June, climbing from 58.6 to 59.5. New design contracts increased from 53.7 in June to 56.4 in July.
Continued growth in design services work bodes well for construction activity in the coming months. Construction spending was up 1.6% year-over-year in June and was ahead 4.8% for the first half of 2017 from the year-ago period.
Heading into 2017, Dodge Data & Analytics forecast that construction starts could increase 5% from 2016 to $712.9 billion this year. As of July, starts activity was running at an annual rate of $728.1 billion, according to Dodge. That is due in large part to a strong increase in activity in the nonbuilding construction sector, while office and hotel construction fell back in July after a strong June.
Highway and bridge construction work was up 10% in July, Dodge reported. The industry is still hopeful that President Donald Trump's much-touted infrastructure spending program, which is expected to focus primarily on roads and bridges, will come to fruition. Last week, Trump signed an executive order streamlining approvals for infrastructure projects that require sign-off by multiple federal agencies.
Meanwhile, the industry is awaiting a more formal infrastructure plan, which has only been teased so far. However, some reports suggest discussion on the topic will have to wait until 2018 as Congress tackles healthcare and tax reform.