Construction MMI: Construction spending rises, ABI reflects second consecutive month of billings growth

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The Construction Monthly Metals Index (MMI) jumped by 12.1% for this month’s reading, as construction spending picked up in March.

May 2021 Construction MMI chart

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US construction spending rises

US construction spending in March reached a seasonally adjusted annual rate of $1,513.1 billion, the Census Bureau reported.

The March rate marked a 0.2% increase from February and a 5.2% increase from February 2020.

Meanwhile, construction spending in Q1 rose 4.5% year over year to $328.3 billion.

Broken down further, spending on private construction reached a rate of $1,169.2 billion, or up 0.7% from February. Within private construction, residential construction came in at a rate of $725.2 billion, or up 1.7%. Nonresidential construction dipped 0.9% to $444.0 billion.

Public construction spending, meanwhile, reached $343.9 billion, or down 1.5%. Educational construction fell 2.0% to $85.3 billion. Highway construction slipped 2.2% to $98.8 billion.

ABI shows growth for second straight month

The Architecture Billings Index (ABI), released monthly by the American Institute of Architects, had fallen for 11 consecutive months until a two-month upturn in February and March.

The March ABI checked in at 55.6, up from 53.3 in February. (Any reading greater than 50 indicates billings growth.)

Meanwhile, the design contracts index registered a reading of 55.7, up from 51.6.

“Business conditions at architecture firms continued their turnaround in March, with a strong ABI score of 55.6 for the month (a score over 50 indicates billings growth), as an even larger share of firms reported an increase in their billings than in February,” the ABI report indicated. “In addition, inquiries into new work and the value of new design contracts both continued to rise, as an increasing number of clients are not only shopping projects around, but also signing contracts to begin new work.”

Illustrating the ongoing economic recovery, the ABI report notes backlogs at firms jumped from Q4 2020 to Q1 2021, rising from about 5.3 months to 6.1 months.

“This is nearly back to the pre-pandemic peak of 6.5 months and means that firms have a solid supply of work in the pipeline if the economy falters in the coming months,” the report added.

By region, the Midwest led the way with an ABI reading of 56.5, followed by the South (55.8), the West (52.8) and the Northeast (50.8).

Pending home sales up by 1.9%

In the housing market, pending home sales picked back up after two straights months of declines.

Pending home sales rose by 1.9% in March, the National Association of Realtors (NAR) reported.

“The increase in pending sales transactions for the month of March is indicative of high housing demand,” said Lawrence Yun, NAR’s chief economist. “With mortgage rates still very close to record lows and a solid job recovery underway, demand will likely remain high.”

Construction employment down in 203 metro areas

The Associated General Contractors of America, in an analysis released last month, reported construction employment from March 2020 to March 2021 fell in 203 metro areas.

Despite the broader economic recovery and upticks in construction spending, rising materials prices, supply chain disruptions and project cancellations are hampering the construction sector’s recovery.

“Nearly twice as many metros have lost construction jobs as gained them in the past 12 months, even though homebuilding has recovered strongly and the overall economy is in much better shape than it was a year ago,” said Ken Simonson, the association’s chief economist. “Nonresidential construction is still at risk of further declines in much of the country.”

Actual metals prices and trends

The Chinese rebar price rose by 8.3% month over month to $808 per metric ton as of May 1. Meanwhile, Chinese H-beam surged by 46.6% to $834 per metric ton.

US shredded scrap steel slipped 1.6% to $436 per short ton.

European commercial 1050 aluminum sheet rose by 10.0% to $3,562 per metric ton.

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