By Kermit Baker, Hon. AIA, for The American Institute of Architects
After a slight decline in January and a weak recovery in February, architecture firms were reporting healthier business conditions in March. The AIA’s Architecture Billings Index (ABI) was 51.9, reflecting the strongest month-to-month growth since last October. New project inquiries, at 58.1 for the month showed somewhat slower growth than the February reading, while the new design contracts index of 51.8 showed a very modest acceleration from the 51.7 reading in February.
Firms in the Midwest reported a very small reduction in billings in March, while firms in the other three regions noted token to healthy gains. In general, Sunbelt firms in the South and West are on a somewhat stronger pace than their Frostbelt counterparts.
By sector, residential firms have reported strong and accelerating business conditions this quarter, commercial/industry modest and stable growth, while institutional firms have seen steady deterioration in business conditions through the quarter.
Uncertainties Continue, But U.S. Economy Looking Resilient
The economy is looking reasonably healthy, and for the first time in many years the construction sector is one of the bright lights in the economic outlook. New single-family housing construction, in particular, is poised for healthy growth. Though single-family housing starts have seen solid gains in recent years, they still are less than half of levels seen prior to the downturn.
The importance of the construction sector to the economy can be seen in the employment figures. On net, construction has added 220,000 payroll positions over the past two quarters, accounting for almost 15% of total job growth in our economy over this period even though construction accounts for only about 5% of payroll positions nationally.
The strong job growth in recent quarters has pushed the national unemployment down to 5.0% with the March reading. Employment conditions have been strong enough recently that many who left the labor force are beginning to re-enter it in the hopes of finding work, while others who were never in the labor force are now entering.
In the first quarter of the year, the labor force – defined as individuals who are employed or actively looking for employment – increased by almost 1.5 million persons, the largest quarterly growth in over a decade and a half.
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