The Architecture Billings Index (ABI) topped the breakeven 50 mark for the 10th month in a row, with a seasonally adjusted score of 50.7 in July, down from 51.3 in June, the American Institute of Architects reported today in its monthly "Work-on-the-Boards" report. The ABI measures the percentage of surveyed architecture firms that reported higher billings than a month earlier, less the percentage reporting lower billings; any score above 50, on a 0-100 scale, indicates an increase in billings. Scores (based on three-month moving averages) varied by practice specialty: multifamily residential, 54.6 (up from a revised 54.1 in June); institutional, 51.1 (down from 51.6); commercial/industrial, 50.1 (down from 52.6); and mixed practice, 48.2 (up from 48.4). "This month we asked firm leaders responding to the survey about the impact of the recent tariffs the U.S. has imposed on other countries, as well as the retaliatory tariffs imposed upon the U.S., updating a similar question asked in April. Overall, [37% of respondents] indicated that they have seen specific consequences on projects as a result of the tariffs, an increase from 24% that reported the same in April. However, 49% of firms reported that they have still not seen any impact, while the remaining 14% of firms indicated that they were not aware of or not sure of any impact....Of the firms that have seen a direct impact from the tariffs, the most commonly cited change that the firm has made or expects to make as a result is material substitutions due to cost considerations (61% of firms), followed by projects redesigned to accommodate rising prices related to the tariffs (57% of firms). Firms also reported that some projects were either delayed or accelerated due to the impact of tariffs, but just 15% of firms reported that projects had been outright cancelled due to rising materials prices/contractor bids from the tariffs."
"Construction costs increased for the 22nd straight month in July," consultancy IHS Markit and the Procurement Executives Group (PEG) reported on Wednesday. Price increases for materials and equipment "were lower in 10 of the 12 categories, though 11 of 12 were above the neutral threshold of 50 [on a scale from 0 to 100, in which readings higher than 50 indicating upward pricing strength], with the index for turbines falling to the neutral mark of 50.0. The biggest losses were in the indexes for the three steel categories, turbines and heat exchangers. The only category that experienced faster price increases this month was ocean freight. 'Trade uncertainty continues to weigh on procurement, and the volatility in the index demonstrates the erratic effects of trade disruptions on supply chains,' said John Anton, director, pricing and purchasing, IHS Markit. 'The pricing environment for materials and equipment is made worse by uncertain policy duration, potential company exceptions, country exemptions and the combination of tariffs and quotas. Those buying from South Korea or Brazil face delivery failure.' Current subcontractor labor prices increased at a slower rate this month" but were higher for the 13th straight month. "In the survey comments, respondents indicated a tight labor market for welders, electrical engineers, and manufacturers. They also continued to highlight concerns about rising prices and uncertainty stemming from developments in U.S. trade policy."
The value of new construction starts in July fell 9% at a seasonally adjusted annual rate, construction data provider Dodge Data & Analytics reported on Tuesday. "The latest month's decline followed strong gains for total construction starts during the previous two months, with May up 14% and June up 11%. By major sector, nonresidential building dropped 22% after soaring 59% in June, which had been lifted by the start of two massive manufacturing plants and two massive office buildings. While July did see several large manufacturing and office projects reach groundbreaking, they were not the same magnitude as what took place in June. The other two major sectors in July held close to their June amounts, with residential building up 2% and nonbuilding construction unchanged. During the first seven months of 2018, total construction starts on an unadjusted basis were...up 2% from the same period a year ago. If the volatile electric utility/gas plant category is excluded, total construction starts during the January-July period of 2018 would be up 5% compared to last year."