Slightly Easing Demand for Commercial and Institutional Projects Reported

04/18/2007 |

March Architecture Billings Index showing stable business activity

The March Architecture Billings Index (ABI), a leading economic indicator of construction activity, is virtually identical to the February figure. The American Institute of Architects (AIA) reported that the March ABI rating was 52.6 (any score above 50 indicates an increase in billings) vs. the 52.5 mark in February. With an approximate 9- to 12-month lag time between architecture billings and construction spending, and significant inquiry levels for new projects, this news continues a forecast that remains favorable for the nonresidential construction market throughout 2007.

“After spiking from November through January, the ABI has returned to more modest growth levels seen earlier this past fall,” says AIA Chief Economist Kermit Baker. “Firms are reporting more stable business activity and, in some cases, are being forced to increase their project backlogs of commercial and institutional projects because of heavy demand for design services over the last 18 months.”

Key March ABI highlights:

-Regional averages: South (54.8), Midwest (52.6), West (51.9), Northeast (50.2).
-Sector index breakdown: institutional (54.8) , mixed practice (52.7), residential (52.0), commercial/industrial (51.7).
-Inquiries index: 61.8.

Baker adds, “Due to the strong business conditions over the last year, compensation levels for architecture positions are expected to increase about 4 percent in 2007, with a significant portion of firms expecting increases in paid overtime as well as in bonuses and profit sharing.”

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 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.

This information was provided by the Washington, D.C.-based American Institute of Architects, an organization with over 80,000 members who are licensed architects, emerging professionals, and allied partners. To find out more, visit (www.aia.org).


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