Let's say someone who is not moving is seeing a rod which has one edge at $x=0$ and the other at $x=a$ so its length is $a$. An observer moving at constant speed $u$ along the $x$-axis uses lorentz transformation to determine the coordinates of these two points in his frame of refrence.

${x}_{a}^{\prime}=\gamma (a-ut)$, ${x}_{0}^{\prime}=\gamma (0-ut)$ so to find the length of the rod we take the difference of these two points and it gives us ${x}_{a}^{\prime}-{x}_{0}^{\prime}=\gamma a$.

I know that $\gamma >1$ so shouldn't the moving reference frame observe the rod to be bigger? Why are we talking about length contraction?

${x}_{a}^{\prime}=\gamma (a-ut)$, ${x}_{0}^{\prime}=\gamma (0-ut)$ so to find the length of the rod we take the difference of these two points and it gives us ${x}_{a}^{\prime}-{x}_{0}^{\prime}=\gamma a$.

I know that $\gamma >1$ so shouldn't the moving reference frame observe the rod to be bigger? Why are we talking about length contraction?