TRG | The Bottom Line – 8/26

The Architectural Billing Index (ABI) for July 2022 was released this week, coming in at 51.0 compared to June’s 53.2. As a reminder, the ABI is an index from the monthly Work-on-the-Boards survey, conducted by the AIA Economics & Market Research Group. The ABI serves as a leading economic indicator that leads nonresidential construction activity by 9-12 months. All regions were above 50 with the exception of the Northeast. The Southeast continues to lead the way, increasing 1.2 to 53.6. Overall, the ABI score this month reflects the slowest growth since January and marks the fourth straight month of a lower score versus the previous month. The impact of extreme inflation and higher interest rates finally are being reflected in relatively more conservative outlooks (although still positive on balance). We expect this trend to continue through the end of 2022. Affordability is a key issue for all, and we are already hearing rumblings of pricing actions easing. Key raw material costs have already rolled over, and we expect to see a break in pricing as the year comes to a close.