06/20/2007

Forecast for Non-Residential Construction Market Remains Strong, Says AIA

 

After three consecutive months of modest growth, the Architecture Billings Index (ABI), a leading economic indicator of construction activity, revealed a spike in design activity. The Washington, D.C.-based American Institute of Architects (AIA) reported that the May ABI was 55.0 (any score above 50 indicates an increase in billings), up from the 52.6 mark in April. With an approximate 9- to 12-month lag time between architecture billings and construction spending, the forecast for the non-residential construction market remains favorable throughout 2007 and into early 2008.

"This is second highest mark of the year behind January's score of 57.9," says AIA Chief Economist Kermit Baker. "Activity in the West is accelerating rapidly, and all non-residential construction sectors are experiencing an extended upturn. The residential numbers have been stabilizing recently, but that is attributed more to firms that are doing work on multi-family projects and may not portend a recovery for the overall housing market."

Key May ABI highlights:

  • Regional averages: West (58.0), Northeast (53.6), South (53.3), Midwest (51.8).
  • Sector index breakdown: residential (55.2), commercial/industrial (54.7), mixed practice (54.3), institutional (54.2).
  • Inquiries index: 62.4.

CIBC Industrial Multi-Industry Analyst Christopher Glynn adds, "For companies serving the non-residential construction sector, the ABI's unique position among other indicators, as tracking architectural billings, serves as a useful forward glimpse of construction activity. In this case, indications are that demand from non-residential construction markets should continue to expand for the foreseeable future, a positive data point for companies in electrical equipment and other related markets."

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 9- to 12-month glimpse into the future of non-residential 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.

This information was provided by the American Institute of Architects, an organization that has represented the professional interests of America's architects since 1857. AIA members include over 80,000 licensed architects, emerging professionals, and allied partners. To find out more, visit (http://www.aia.org/).

 

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