Architecture Billings Index stays in growth mode

AIAThe Architecture Billings Index (ABI) remained positive again in June after the first decline in ten months in April.  As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lag time between architecture billings and construction spending.  The American Institute of Architects (AIA) reported the June ABI score was 51.6, down from a mark of 52.9 in May.  This score reflects an increase in demand for design services (any score above 50 indicates an increase in billings).  The new projects inquiry index was 62.6, up sharply from the reading of 59.1 the previous month.
“With steady demand for design work in all major nonresidential building categories, the construction sector seems to be stabilizing,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA.  ”Threats to a sustained recovery include construction costs and labor availability, inability to access financing for real estate projects, and possible adverse effects in the coming months from sequestration and the looming federal debt ceiling debate.”

Key June ABI highlights:

  • Regional averages: Northeast (55.6), South (54.8),  West (51.2), Midwest (48.3)
  • Sector index breakdown: commercial / industrial (54.7), multi-family residential (54.0), mixed practice (52.4), institutional (51.8)
  •  Project inquiries index: 62.6

The regional and sector categories are calculated as a 3-month moving average, whereas the index and inquiries are monthly numbers.

Architecture Billings Index in Holding Pattern

AIAThe first quarter of 2011 has seen the Architecture Billings Index (ABI) remain virtually unchanged and right at, or slightly above, the break-even level. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the March ABI score was 50.5, a negligible decrease from a reading of 50.6 the previous month. This score reflects a modest increase in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 58.7, up significantly from a mark of 56.4 in February.

“Currently, architecture firms are essentially caught swimming upstream in a situation where demand is not falling back into the negative territory, but also not exhibiting the same pace of increases seen at the end of 2010,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “The range of conditions reported continues to span a very wide spectrum with some firms reporting an improving business environment and even ramping up staffing, while others continue to operate in survival mode. The catalyst for a more robust recovery is likely financing, with stronger growth occurring only when lending institutions begin approving credit for construction projects with much greater regularity.”

Key March ABI highlights:

  • Regional averages: Midwest (53.5), Northeast (51.4), West (50.6), South (49.7)
    Sector index breakdown: commercial / industrial (54.7), multi-family residential (50.8), mixed practice (49.8), institutional (48.0)
  • Project inquiries index: 58.7