Architecture Billings Index Reverts into Negative Territory for First Time in Nine Months
Difficulty in obtaining financing for construction projects continues

After indicating increasing demand for design services for the better part of a year, the Architecture Billings Index has reversed course in April. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the April ABI score was 48.6, down from a mark of 51.9 in March. This score reflects a decrease in demand for design services (any score above 50 indicates an increase in billings) and is the lowest mark since July 2012. The new projects inquiry index was 58.5, down from the reading of 60.1 the previous month.

“Project approval delays are having an adverse effect on the design and construction industry, but again and again we are hearing that it is extremely difficult to obtain financing to move forward on real estate projects,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “There are other challenges that have prevented a broader recovery that we will examine in the coming months if this negative trajectory continues. However, given that inquiries for new projects continue to be strong, we’re hopeful that this is just a short-term dip.”

Key April ABI highlights:

• Regional averages: South (52.6), West (50.7), Midwest (49.4), Northeast (48.2)

• Sector index breakdown: multi-family residential (52.0), institutional (50.1), commercial / industrial (49.2), mixed practice (48.6)

• Project inquiries index: 58.5

The regional and sector categories are calculated as a 3-month moving average, whereas the index and inquiries are monthly numbers.

About the AIA Architecture Billings Index
The Architecture Billings Index (ABI), produced by the AIA Economics & Market Research Group, is a leading economic indicator that provides an approximately nine to twelve month glimpse into the future of nonresidential construction spending activity. The diffusion indexes contained in the full report are derived from a monthly “Work-on-the-Boards” survey that is sent to a panel of AIA member-owned firms. Participants are asked whether their billings increased, decreased, or stayed the same in the month that just ended as compared to the prior month, and the results are then compiled into the ABI. These monthly results are also seasonally adjusted to allow for comparison to prior months. The monthly ABI index scores are centered around 50, with scores above 50 indicating an aggregate increase in billings, and scores below 50 indicating a decline. The regional and sector data are formulated using a three-month moving average. More information on the ABI and the analysis of its relationship to construction activity can be found in the White Paper Architecture Billings as a Leading Indicator of Construction: Analysis of the Relationship Between a Billings Index and Construction Spending on the AIA web site.

About The American Institute of Architects
Founded in 1857, members of the American Institute of Architects consistently work to create more valuable, healthy, secure, and sustainable buildings, neighborhoods, and communities. Through nearly 300 state and local chapters, the AIA advocates for public policies that promote economic vitality and public well being. Members adhere to a code of ethics and conduct to ensure the highest professional standards. The AIA provides members with tools and resources to assist them in their careers and business as well as engaging civic and government leaders, and the public to find solutions to pressing issues facing our communities, institutions, nation and world. Visit www.aia.org.

Builder Confidence Improves in May

Builder confidence in the market for newly built, single-family homes improved three points to a 44 reading on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for May, released today. This gain, from a downwardly revised 41 in April, reflected improvement in all three index components – current sales conditions, sales expectations and traffic of prospective buyers.

“Builders are noting an increased sense of urgency among potential buyers as a result of thinning inventories of homes for sale, continuing affordable mortgage rates and strengthening local economies,” noted National Association of Home Builders (NAHB) Chairman Rick Judson, a home builder from Charlotte, N.C. “This is definitely an encouraging sign even amidst rising challenges with regard to the cost and availability of building materials, lots and labor.”

“While industry supply chains will take time to re-establish themselves following recession-related cutbacks, builders’ views of current sales conditions have improved and expectations for the future remain quite strong as consumers head back to the market in force,” said NAHB Chief Economist David Crowe.

Derived from a monthly survey that NAHB has been conducting for 25 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

All three HMI components posted gains in May. The index gauging current sales conditions increased four points to 48, while the index gauging expectations for future sales edged up a single point to 53 – its highest level since February of 2007. The index gauging traffic of prospective buyers gained three points to 33.

Looking at the three-month moving averages for regional HMI scores, no movement was recorded in the Northeast, Midwest or South, which held unchanged at 37, 45 and 42, respectively. Only the West recorded a decline, of six points to 49 in May.

Editor’s Note: The NAHB/Wells Fargo Housing Market Index is strictly the product of NAHB Economics, and is not seen or influenced by any outside party prior to being released to the public. HMI tables can be found at nahb.org/hmi. More information on housing statistics is also available at housingeconomics.com.

For more information visit www.nahb.org.

Construction Employment Declines In 32 States And D.C. Between March And April Even As Industry Adds Jobs In 29 States Over Past Year
Connecticut, Florida Lead Job Pickup for Month; Hawaii, California Top List of States with One-Year Gains, While Vermont and Illinois Trail for Month and Year

Construction employment declined in 32 states and the District of Columbia in April even as 29 states added jobs between April 2012 and April 2013, according to an analysis by the Associated General Contractors of America of Labor Department data. Association officials noted that construction demand in a number of states appears to be slackening amid federal construction spending cuts and relatively weak private sector demand.

“The industry shows signs of recovering but employment growth continues to be uneven, with some areas seeing stronger gains even as others continue to contract,” said Ken Simonson, the association’s chief economist. “In addition, recent federal construction spending cuts amid still modest private sector growth is making it hard for the industry to recover in more areas.”

Simonson noted that Illinois had the largest decline in construction employment between March and April (-7,900 jobs, -4.3percent). New York had the second-largest decline in employment (-6,600 jobs, -2.0 percent), followed by Wisconsin (-3,900 jobs, -4.1 percent). Vermont had the highest percentage decrease in construction employment (-6.3 percent, -900 jobs), followed by Illinois and Wisconsin.

Seventeen states added construction jobs between March and April, while employment was flat in New Hampshire. Florida added the largest number of construction jobs (9,000 jobs, 2.6 percent) while Connecticut had the highest percentage increase (3.9 percent, 2,100 jobs). California added the second-largest number of jobs added (7,400 jobs, 1.2 percent), followed by Texas (6,000 jobs, 1.0 percent). Mississippi had the second-highest percentage increase (3.1 percent, 1,500 jobs), followed by West Virginia (2.9 percent, 1,000 jobs).

Simonson reported that 29 states added construction jobs from April 2012 to April 2013 and 21 states and D.C. states lost workers. Hawaii led all jurisdictions in the percentage of new construction jobs (11.5 percent, 3,300 jobs); followed by Alaska (9.1 percent, 1,500 jobs) and Louisiana (8.1 percent, 10,200 jobs). California added the most new construction jobs over the past 12 months (44,800, 7.7 percent), followed by Texas (41,500 jobs, 7.1 percent).

Among the states losing construction jobs during the past year, Vermont lost the highest percentage (-11.3 percent, -1,700 jobs), followed by South Dakota (-9.6 percent, -2,100 jobs) and Rhode Island (-8.6 percent, -1,400 jobs). Illinois lost the most jobs (-12,900 jobs, -6.8 percent), followed by Ohio (-9,200 jobs, -5.0 percent) and Indiana (-5,600 jobs, -4.4 percent).

Association officials urged Congress and the administration to reconsider its current approach of making indiscriminate, across-the-board cuts to a range of federal construction programs. They said the broader economic impact of declining construction employment in most states would cost more in lost activity and revenue than the cuts were likely to save. They also urged Washington officials to act quickly to enact long-term legislation to fund repairs to locks, waterways and flood protection.

“While the industry ultimately needs broader private sector demand to truly recover, boosting infrastructure investments will certainly help,” said Stephen E. Sandherr, the association's chief executive officer. “The last thing Washington should be doing is taking steps that undermine the sector's nascent recovery.”

View the state employment data by rank and by state.

Construction Fatality Rate Declining Faster In Texas Than Most Other States According To New Analysis Of Federal Safety Data

Texas' 26 Percent Drop in Fatality Rate Between 2008 and 2011 Eighth Largest Decline Among States, Contractors Hold 10th Annual Statewide Safety Stand Down as Part of Efforts to Further Improve Safety

The construction fatality rate is declining faster in Texas than most other states according to a new analysis of federal safety data conducted by the Associated General Contractors of America. Association officials noted that the state's construction fatality and injury rates have declined, as many contractors have spent much of the past decade focusing on improving workplace safety.

"While none of our members will be happy until there are zero injuries and zero fatalities on construction sites, the steps our firms are taking in Texas to improve construction safety are working," said Brian Turmail, the national association?s spokesperson. ?When you work next to heavy machinery in tight quarters - erecting structures and building roads and bridges - making sure workers are safe is essential."

Turmail said that Texas went from having a construction fatality rate in 2008 (the earliest year such data is available) of 13.1 deaths per 100,000 workers to having a fatality rate of 9.7 in 2011 (the most recent year such data is available). The state's 26 percent decline in fatality rate was the eighth largest drop compared to the 41 states and the District of Columbia where the federal Bureau of Labor Statistics tracks fatality rates. Texas went from having the 32nd highest fatality rate in 2008 to the 20th, Turmail added.

Meanwhile, Texas contractors have successfully reduced the construction injury rate by 36 percent between 2003 and 2011 (the earliest and most recent years such data is available), from 4.4 injuries per 100 workers to 2.8. The state now has the seventh lowest construction injury rate among the 41 states and the District of Columbia were similar data is still available, Turmail added.

Turmail announced the new safety data during a visit to a Houston construction site participating in a statewide halt in construction activity, known as a Safety Stand Down, so contractors can provide additional safety training for their workers. The association spokesman said that one of the reasons for the decline in construction and fatality rates is that many construction firms in Texas have worked hard to improve workplace safety, noting that today was the 10th anniversary of the statewide Safety Stand Downs.

He added that many firms and local association chapters in Texas have created new safety programs focused on reducing the risk of falling on the job site, getting struck by moving equipment, and succumbing to dehydration and heat exhaustion during the state's long, hot summers. Also, he added, many firms and chapters have brought on new staff whose main focus is ensuring construction sites are safe and crews are using safety gear properly.

Despite the improving safety trends, Turmail said his association and its member firms will continue to hold Safety Stand Downs, offer safety training and partner with agencies like the Occupational Safety & Health Administration (OSHA) to find new ways to improve safety. "This is Texas and we can do even better when it comes to the fatality rate and the injury rate for construction," Turmail said.

Click here to see the state construction fatality data. Click here to see the state construction injury data.

Housing Starts Slip with Multifamily Correction in April

A correction from an unsustainably high level of production on the volatile multifamily side was largely responsible for a 16.5 percent dip in nationwide housing starts to a seasonally adjusted annual rate of 853,000 units in April, according to newly released figures from HUD and the U.S. Census Bureau. However, permits for new construction headed solidly higher in the month, with a particularly strong gain in multifamily issuance.

“While builders today are considerably more optimistic than they have been at earlier stages of the housing recovery, numerous challenges are slowing their ability to get new projects underway,” observed Rick Judson, chairman of the National Association of Home Builders (NAHB) and a home builder from Charlotte, N.C. “In particular, limited access to construction credit, tough qualification standards for mortgage borrowers and rising costs for building materials, developable lots and labor are impacting the pace of construction activity.”

“The big decline in April housing production was mostly on the multifamily side, which recorded a similarly dramatic increase in the previous month,” noted NAHB Chief Economist David Crowe. “Meanwhile, overall permits for new construction surpassed the million-unit mark and the number of yet-to-be-used permits rose in April, which is a good indicator that the dip in building activity was likely a temporary pause due partly to unseasonably poor weather conditions.”

While single-family starts posted a modest, 2.1 percent decline to a seasonally adjusted annual rate of 610,000 units in April, multifamily starts posted a 38.9 percent decline to 243,000 units. Combined starts activity fell 12.8 percent in the Northeast, 27.9 percent in the South and 6.2 percent in the West, but increased 10.9 percent in the Midwest.

Total permit issuance, which can be an indicator of future building activity, gained 14.3 percent to a seasonally adjusted annual rate of 1.02 million units in April – the fastest pace since June of 2008. That increase reflected a 3.0 percent gain to 617,000 units on the single-family side and a 37.5 percent gain to 400,000 units on the multifamily side.

Three out of four regions posted double-digit gains in permit issuance in April, with the Midwest recording a 22.3 percent increase, the South registering a 16.0 percent gain and the West posting a 12.9 percent gain. The Northeast posted a 2.0 percent decline.

For more information visit www.nahb.org.

Construction Unemployment Drops To 13.2 Percent, Lowest April Mark In Five Years As Industry Adds Jobs Year-Over-Year Despite Dip In Latest Month
Residential Contractors Add Jobs at Robust Clip for the Month and Year While Nonresidential Employment Rises Relative to 2012 Level but Slips from March; Association Warns of Potential Future Worker Shortages

The unemployment rate for construction workers fell to the lowest April level in five years as contractors added more than 150,000 employees in the past year despite a dip in employment last month, according to an analysis of new government data by the Associated General Contractors of America. Association officials noted that, despite the monthly drop, the industry is likely to continue adding jobs for much of 2013.

"It is heartening to see that both nonresidential and residential segments of the construction industry added significant numbers of workers in the last 12 months, even though gains from March to April were limited to the residential side," said Ken Simonson, the association's chief economist. "Other indicators, such as the continuing growth in architectural and engineering employment, suggest that demand for construction will expand further."

Seasonally adjusted construction employment of 5.79 million in April was 6,000 less than in March, but 154,000, or 2.7 percent, higher than in April 2012, Simonson noted. Residential building and specialty trade contractors added 13,300 workers in the month and 83,700 (4.1 percent) over 12 months. Nonresidential building and specialty trade contractors, along with heavy and civil engineering construction firms, lost 19,700 employees in April, but added 70,100 (2.0 percent) over 12 months. Architectural and engineering services employment climbed by 2,700 in the month and 23,400 (1.8 percent) from a year earlier.

The unemployment rate for jobseekers who last worked in construction fell to 13.2 percent from 14.5 percent in April 2012, the lowest April level since 2008. Three years ago, in April 2010, the rate was 21.8 percent. The industry unemployment rate is not seasonally adjusted and, thus, can be compared to the same month in past years but not month to month.

"The ongoing decline in the construction unemployment rate is only partly a result of opportunities in the industry," Simonson pointed out. "Unfortunately, many former workers have now left the industry, perhaps permanently, which will make further recovery in construction more difficult."

Association officials said that if construction employment grows as expected during the coming months, it will become increasingly difficult for employers in particularly fast growing market regions and segments to find qualified workers. They added that a lack of domestic skill-based educational programs and arbitrary caps on the number of construction workers in proposed immigration legislation would make it harder for firms to keep up with growing demand.

"It will not take a lot of growth in demand before many construction firms are scrambling to fill positions with skilled workers," said Stephen E. Sandherr, the association's chief executive officer. "We need to provide significantly more opportunities for students to learn skills-based crafts like construction and avoid imposing artificial limits on the size of the construction workforce in immigration legislation."

More Positive Momentum for Architecture Billings

All regions and building sectors continue to report positive business conditions

The Architecture Billings Index (ABI) is reflecting a steady upturn in design activity. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the March ABI score was 51.9, down from a mark of 54.9 in February. This score reflects an increase in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 60.1, down from the reading of 64.8 the previous month.

You can see this press release online here: http://www.aia.org/press/releases/AIAB098531

“Business conditions in the construction industry have generally been improving over the last several months,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “But as we have continued to report, the recovery has been uneven across the major construction sectors so it’s not a big surprise that there was some easing in the pace of growth in March compared to previous months.”

Key March ABI highlights:

• Regional averages: Northeast (54.6), Midwest (53.9), South (53.6), West (51.9)

• Sector index breakdown: multi-family residential (56.9), commercial / industrial (53.5), mixed practice (53.3), institutional (50.6)

• Project inquiries index: 60.1

The regional and sector categories are calculated as a 3-month moving average, whereas the index and inquiries are monthly numbers.

About the AIA Architecture Billings Index
The Architecture Billings Index (ABI), produced by the AIA Economics & Market Research Group, is a leading economic indicator that provides an approximately nine to twelve month glimpse into the future of nonresidential construction spending activity. The diffusion indexes contained in the full report are derived from a monthly “Work-on-the-Boards” survey that is sent to a panel of AIA member-owned firms. Participants are asked whether their billings increased, decreased, or stayed the same in the month that just ended as compared to the prior month, and the results are then compiled into the ABI. These monthly results are also seasonally adjusted to allow for comparison to prior months. The monthly ABI index scores are centered around 50, with scores above 50 indicating an aggregate increase in billings, and scores below 50 indicating a decline. The regional and sector data are formulated using a three-month moving average. More information on the ABI and the analysis of its relationship to construction activity can be found in the White Paper Architecture Billings as a Leading Indicator of Construction: Analysis of the Relationship Between a Billings Index and Construction Spending on the AIA web site.

About The American Institute of Architects
Founded in 1857, members of the American Institute of Architects consistently work to create more valuable, healthy, secure, and sustainable buildings, neighborhoods, and communities. Through nearly 300 state and local chapters, the AIA advocates for public policies that promote economic vitality and public well being. Members adhere to a code of ethics and conduct to ensure the highest professional standards. The AIA provides members with tools and resources to assist them in their careers and business as well as engaging civic and government leaders, and the public to find solutions to pressing issues facing our communities, institutions, nation and world. Visit www.aia.org.

Rising Costs Put Squeeze on Builder Confidence in April

Facing increasing costs for building materials and rising concerns about the supply of developed lots and labor, builders registered less confidence in the market for newly built, single-family homes in April, with a two-point drop to 42 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today.

“Many builders are expressing frustration over being unable to respond to the rising demand for new homes due to difficulties in obtaining construction credit, overly restrictive mortgage lending rules and construction costs that are increasing at a faster pace than appraised values,” said Rick Judson, National Association of Home Builders (NAHB) Chairman and a home builder from Charlotte, N.C. “While sales conditions are generally improving, these challenges are holding back new building and job creation.”

“Supply chains for building materials, developed lots and skilled workers will take some time to re-establish themselves following the recession, and in the meantime builders are feeling squeezed by higher costs and limited availability issues,” explained NAHB Chief Economist David Crowe. “That said, builders’ outlook for the next six months has improved due to the low inventory of for-sale homes, rock bottom mortgage rates and rising consumer confidence.”

Derived from a monthly survey that NAHB has been conducting for 25 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

While the HMI component gauging current sales conditions declined two points to 45 and the component gauging buyer traffic declined four points to 30 in April, the component gauging sales expectations in the next six months posted a three-point gain to 53 – its highest level since February of 2007.

Looking at three-month moving averages for regional HMI scores, the Northeast was unchanged at 38 in April while the Midwest registered a two-point decline to 45, the South registered a four-point decline to 42 and the West posted a three-point decline to 55.

Editor’s Note: The NAHB/Wells Fargo Housing Market Index is strictly the product of NAHB Economics, and is not seen or influenced by any outside party prior to being released to the public. HMI tables can be found at nahb.org/hmi. More information on housing statistics is also available at housingeconomics.com.

For more information visit www.nahb.org.