Architecture billings index drops nearly five points, still posts small increase

January decline could indicate sustained downturn in nonresidential market
August 11, 2010

Following a stretch of 3 months with an increase in demand for design services, the Architecture Billings Index (ABI) dropped precipitously in January. As a leading economic indicator of construction activity, the ABI shows an approximate nine to twelve month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the January ABI rating was 50.7, down sharply from the 55.0* mark in December (any score above 50 indicates an increase in billings), and inquiries for new projects was 59.5.

                                           

* Every January the AIA research department uses a formula from the Department of Commerce that re-estimates ABI data based on seasonal factors resulting in a recalibration of recent figures.

“Given the concerns about condition of the overall economy, coupled with a suffering housing market, it is not surprising to see a falloff in demand for architectural services.” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “This is likely to affect firms that specialize in commercial and industrial projects the most because businesses are expressing growing anxiety over a potential recession and are cutting back on plans for expansion.”

Key January ABI highlights:

Regional averages: Northeast (63.0), South (53.9), West (51.3), Midwest (49.3)Sector index breakdown: multi-family residential (55.4), commercial / industrial (54.5), institutional (51.7), mixed practice (51.3)Billings inquiries index: 59.5

         
 

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