Latest reports suggest business stability, growth?

Two industry economics reports are indicating that the commercial-construction business may be stabilizing and that growth may be on the horizon. While there are still several negative influences in place (credit, demand, economic uncertainty), the positive influences seem to be gaining ground.
   The latest Architecture Billings Index (ABI), from the American Institute of Architects, Washington, indicates a negligible increase from May to June. The index reflects the approximate 9-to-12-month lag time between architecture billings and construction spending. The June ABI rating was 46.0, up slightly from a reading of 45.8 in May. The new-projects-inquiry index increased from 55.5 to 57.7.
   “The steep decline in nonresidential property values has slowed investment in new facilities,” said AIA chief economist Kermit Baker, PhD, Hon. AIA. “Conditions at architecture firms continue to remain very soft, but we’re optimistic that they will improve before the end of the year.”
   Even more positive is the July report from Reed Construction Data, Norcross, GA. That report indicates that non-residential construction starts through June are 13% higher than the same 2009 time period and 3% more than in May 2010. According to the report, the numbers indicate that construction has been relatively steady for the past four months. The numbers also tell us that construction starts are 46% greater than the low point in June 2010, but 25% less than the pre-recession peak. Reed also expects construction starts to remain steady in the coming months and then rise at the end of the year.
   Comparing January through June 2009 numbers with the same time period this year, Reed shows construction-start improvement in government office (30.1%), laboratory (12.3%), religious (8.7%), hospital/clinic (14.7%), police/courthouse/prison (45.7%), and school/college (12%). A real standout is military facilities, which showed a 203.7% growth.—Gary L. Parr

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