07/24/2009

Architecture Billings Index Takes Turn for the Worse

 

The Architecture Billings Index (ABI), which reflects the approximate 9- to 12-month lag time between architecture billings and construction spending, and is a leading economic indicator of construction activity, plunged nearly 5 points in June, despite showing signs of stabilization over the last 3 months.

The American Institute of Architects (AIA) reported that the June ABI rating was 37.7, a significant decrease from May’s rating of 42.9. This score indicates a sharp decline in demand for design services; however, the new projects inquiry score was 53.8, the fourth straight month with a score in the mid-50s. Any score above 50 indicates an increase in billings.

Additional highlights from the June ABI showed that the regional average for the Northeast was 42.8; for the South, 40.5; for the West, 39.9; and for the Midwest, 36.2. Additionally, the rating for mixed practice was 43.5; multi-family residential, 42.7; commercial/industrial, 39.5; and institutional, 37.0.

“It appears as though we may have not yet reached the bottom of this construction downturn,” says Kermit Baker, chief economist at AIA. “Architecture firms are struggling and concerned that construction market conditions will not even improve as soon as next year. There has also been little movement in terms of stimulus funding allocated for design projects having the desired impact of leading to new work.”

 

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