Architecture Billings Index Bounces Back After Substantial Dip

The Architecture Billings Index (ABI), a leading economic indicator of construction activity, was up almost 6 points in July following a 5-point dip the previous month. The ABI reflects the approximate 9 to 12 month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported that the July ABI rating was 43.1, up significantly from 37.7 the month prior, but still indicating a decline in demand for design services.

“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,” says Kermit Baker, chief economist at 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.”

Other highlights from the July ABI rating include: The new projects inquiry score fell from 53.8 to 50.3, but it was the fifth straight month with a score in above 50 (any score above 50 indicates an increase in billings). Also, the regional average for the South was 43.4; for the West, 39.7; for the Northeast, 37.8; and for the Midwest, 36.9. The mixed-practice sector had an ABI rating of 42.9; commercial/industrial had a rating of 42.9; multi-family residential, 40.7; and institutional, 37.1.