The American Institute of Architects has released its May Architectural Billings Index, and the headline figure came in at 53.5, down from April's 56.5 reading and March's 58.0 one, but like similar indexes, any reading above 50 means an increase in activity over the prior month.
For context about this figure, the May ABI reading is the 16th consecutive month above 50. With funds associated with the Biden Infrastructure Law starting to flow, we're far more interested in the new project inquiries and design contract sub-indexes that are part of the ABI. Those May figures clocked in at 63.9 and 56.9, respectively, up from 62.3 and 55.4 in April, and as the additional funds are released we would expect to see those two sub-indexes remain well above the 50 level.
We'd remind members the ABI is a forward-looking indicator by roughly nine to 12 months over which the new project inquiries and design contract figures translate into billings. Despite the headline dip vs. April, the underlying and more forward-looking data keeps us bullish on our shares of United Rentals (URI) as well as Nucor (NUE) , given the expected pick-up in nonresidential construction, infrastructure or otherwise.