After its first negative score in 10 months, the Architecture Billings Index (ABI) showed a small increase in design activity in February, and has been positive 10 out of the past 12 months.
As an economic indicator of construction activity, the ABI reflects a 9-to-12-month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the February ABI score was 50.4, up slightly from a mark of 49.9 in January. This score reflects a minor increase in design services (any score above 50 indicates an increase in billings).
Questions about the uneven recovery in both residential and commercial construction are keeping the US architectural design market from growing more than the slight increases and small decrease of recent months.
Meanwhile, in terms of metal materials prices, Chinese H-beam steel was the biggest gainer on MetalMiner‘s weekly Construction MMI®, an index tracking a basket of metals used by the construction industry. (All metals and prices within the index available at the bottom of this article.)
Health of Major US Construction Sectors
“The health of the institutional market has been the key factor for positive business conditions for the design and construction industry in recent months, and it is encouraging to see that sector remain on solid footing,” said AIA Chief Economist Kermit Baker, Hon. AIA, PhD. “However, we’re seeing some slowing in the other major construction sectors. Design billings for residential projects had its first negative month in more than three years, and commercial design billings have seen only modest growth in recent years.”
A sector that’s not covered by the ABI, infrastructure spending, is experiencing growing pains, as well. Many economists are projecting that the Federal Reserve will raise interest rates this summer, which could increase borrowing costs and potentially affect infrastructure construction, according to US News and World Report. Several economists say that infrastructure spending is badly needed and that Congress should look at alternative ways to fund construction, including raising the gas tax and increasing public-private partnerships.
Residential and commercial construction could see a lack of available credit, as well, if the Fed signals that interest rates could rise sooner rather than later.
Key February ABI Highlights
- Regional averages: South (52.5), Midwest (50.2), Northeast (48.0), West (46.7)
- Sector index breakdown: institutional (52.2), commercial / industrial (51.4), multifamily residential (48.9), mixed practice (45.3)
- Design contracts index: 50.0
Actual Construction MMI Weekly Prices
Chinese H-beam steel saw the largest upwards shift on the weekly Construction MMI®, rising 2.6% to settle at CNY 2,350 ($375.18) per metric ton. The price of US shredded scrap increased by a slight 0.8% over the past week to $248.00 per short ton. This past week, the Chinese low price of 62% Australian iron ore fines kept quiet, holding at at CNY 480.00 ($76.64) per dry metric ton. Chinese rebar prices held steady from the previous week at CNY 2,480 ($395.93) per metric ton.
The price of Chinese aluminum bar rose 0.7% to CNY 13,690 ($2,186) per metric ton after falling 0.4% during the previous week. Following a steady week, prices for European 1050 aluminum closed flat at EUR 2,606 ($2,749) per metric ton.
The weekly US Gulf Coast bar fuel surcharge fell 2.0% for the week to settle at $0.31 per mile. Following a 0.1% increase in the week prior, the weekly US Midwest bar fuel surcharge fell 1.9% last week to $0.32 per mile. The weekly US Rocky Mountain bar fuel surcharge shifted up 0.7% to close at $0.32 per mile this week.
The Construction MMI® collects and weights 9 metal price points used within the construction industry to provide a unique view into construction industry price trends. For more information on the Construction MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.