A modest increase in the July Architecture Billings Index (ABI), a leading economic indicator of nonresidential construction activity, counters the previous two months that showed negative scores. The uptick can be attributed to growth at commercial/industrial architecture firms. The latest figures continue the pattern that suggests a strong outlook in the commercial construction market well into 2007, based on the approximate six to nine month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the July ABI rating was 51.8 (any score above 50 indicates an increase in billings), just above the 49.2 mark in June.
&DIVL /> “For the last few months the index has been close to the break-even point on both the positive and negative side,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “We will continue to monitor for signs of a pending design slowdown, but for now these figures are in line with our long range outlook for a healthy nonresidential sector.”
&DIVL />Key July ABI highlights:
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Regional averages: West (52.7), Northeast (51.6), South (51.4), Midwest (48.2)
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Sector index breakdown: commercial / industrial (58.4), institutional (52.8), residential (46.8), mixed (45.2)
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Billings inquiries index: 64.0, up from the 56.7 score in June
“The July data is quite encouraging with respect to the health and sustainability of the nonresidential construction upcycle that is so important to many of our companies,” said Banc of America Securities Electrical Equipment/Multi-industry Senior Equity Research Analyst Robert McCarthy, CFA. “In particular, we find the strong rebound in overall billing inquiries to above 60 an important positive data point as it is a vital leading indicator for continued nonresidential construction strength moving into 2007.”
&DIVL /> About the AIA Architecture Billings Index
&DIVL />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 six 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. &DIVL />
