Architecture Billings Index Bounces Back After Substantial Dip Print E-mail
Wednesday, 19 August 2009 09:33

Improvement in business conditions tempered by a leveling off in project inquiries

Exhibiting a welcome rebound following a 5-point dip the month prior, the Architecture Billings Index (ABI) was up almost 6 points in July. 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 July ABI rating was 43.1, up noticeably from 37.7 the previous month.  This score, however, still indicates a decline in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry score fell to 50.3 from 53.8, but it was the fifth straight month with a score in above 50.
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“It is always encouraging to see an uptick in our index, but there has been too much contraction in recent months to get overly optimistic about business conditions returning to levels they were at two months ago,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “In addition to a very competitive marketplace, architects continue to report that lenders have still not yet fully opened credit lines and that the stimulus funding has so far provided limited project activity for the design community overall.”

Key July ABI highlights:

- Regional averages: South (43.4), West (39.7), Northeast (37.8), Midwest (36.9)
- Sector index breakdown: mixed practice (42.9), commercial / industrial (42.9), multi-family residential (40.7), institutional (37.1)
- Project inquiries index: 50.3

About the AIA Architecture Billings Index
The Architecture Billings Index is derived from a monthly “Work-on-the-Boards” survey and produced by the AIA Economics & Market Research Group. Based on a comparison of data compiled since the survey’s inception in 1995 with figures from the Department of Commerce on Construction Put in Place, the findings amount to a leading economic indicator that provides an approximately nine to twelve month glimpse into the future of nonresidential construction activity. The diffusion indexes contained in the full report are derived from a monthly survey sent to a panel of AIA member-owned firms. Participants are asked whether their billings increased, decreased, or stayed the same in the month that just ended. According to the proportion of respondents choosing each option, a score is generated, which represents an index value for each month. The regional and sector data is formulated using a three-month moving average.

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Last Updated on Wednesday, 19 August 2009 09:37
 
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