03/01/2010

Architecture Billings Index Drops Significantly

 

Beginning its third year of negative conditions, the Architecture Billings Index (ABI), which reflects the approximate 9- to 12-month lag time between architecture billings and construction spending, dropped nearly 3 points in January.

The American Institute of Architects (AIA) reported the January ABI rating was 42.5, down sharply from a revised reading of 45.4 in December. The ABI is a leading economic indicator of construction activity, and this rating indicates a continued decline in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry score was 52.5, down more than 7 points, but still indicating an increase in billings.

“Projects are being delayed or cancelled because lending institutions are placing unusually stringent equity requirements on new developments. This is even happening to financially sound companies with strong credit ratings,” says Kermit Baker, chief economist for AIA. “This serious situation is being compounded by a skittish bond market, decreased tax revenues for publicly financed projects, and declining property values – all which serve as deterrents for construction activity. Until these factors are resolved, the design and construction industry – which accounts for roughly 10 percent of GDP and is facing unemployment figures in excess of 20 percent – will continue to face deteriorating market conditions.”

Additionally, the January ABI showed regional averages for the Midwest to be 48.0; for the Northeast, 45.7; for the South, 41.32; and for the West, 40.5. The January ABI rating for the multi-family residential sector was 50.1; commercial/industrial, 44.9; institutional, 43.1; and mixed-practice, 40.3.

 

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Wood construction is both cost and energy efficient. Check out Morton Buildings and our designBUILD team online today to discover all the benefits of post-frame construction.

We Can Help You Reduce Energy by 30%

Our mission is to help our customers manage their buildings' energy costs, improve reliability, and enhance performance while having a positive impact on the environment.
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Mitsubishi Electric’s H2i R2-Series heat pumps provide 100% heating capacity down to 0° F and simultaneous heating and cooling down to -4° F delivering year-round comfort, regardless of climate zone.

 
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