Economy Watch: Architecture Billings Growth Modest in February

The news from the AIA comes as the Federal Open Market Committee raised interest rates, effectively increasing the cost of money.
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Source: American Institute of Architects Architecture Billings Index, February 2018

The American Institute of Architects reported on Wednesday that its Architecture Billings Index came in at 52.0 in February, down from 54.7 in January. Despite the drop, the score reflects an increase in design services provided by U.S. architecture firms, the organization said. In particular, firms with a multifamily residential or an institutional specialization continued to report extremely strong billings.

The index is designed to be a leading economic indicator of commercial and residential construction activity, reflecting the nine- to 12-month lead time between architecture billings and construction spending. The index usually predicts U.S. construction spending growth, though not always in each property sector.

AIA’s survey asks whether their billings increased, decreased, or stayed the same for the month compared to the month before. The resulting index is one that centers around 50, with results above 50 pointing to an increase in billings, while results below 50 mean a decline.

The news comes on the heals of the Federal Open Market Committee, as expected, raising the federal funds rate to 1.5 percent to 1.75 percent, up 25 basis points, effectively raising the cost of money, though the rates are still low by historic standards. In its statement, the FOMC said that “the labor market has continued to strengthen and that economic activity has been rising at a moderate rate. Job gains have been strong in recent months, and the unemployment rate has stayed low.”