Architecture Billings Index shows nominal increase

March 23, 2011

Washington, D.C. – March 23, 2011 – During the first two months of 2011 the Architecture Billings Index (ABI) is not exhibiting the strength of business conditions that were seen in the final quarter of 2010.  As a leading economic indicator of construction activity, the ABI reflects the approximate nine to 12 month lag time between architecture billings and construction spending.  The American Institute of Architects (AIA) reported the February ABI score was 50.6, up slightly from a reading of 50.0 the previous month.  This score reflects a modest increase in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 56.4, compared to a mark of 56.5 in December.

“Overall demand for design services seems to be treading water over the last two months,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “We’ve been preaching patience and cautious optimism for a full recovery because there continues to be a wide range of business conditions for architecture firms that are also influenced by firm size, practice specialties and regional location.  We still expect the road to recovery to move at a slow, but steady pace.” 

Key February ABI highlights:

Regional averages: Midwest (55.3), South (50.1), West (49.1),  Northeast (46.4)

Sector index breakdown: commercial / industrial (55.0),  mixed practice (51.3),

multi-family residential (49.7),  institutional (48.9) 

Project inquiries index: 56.4

About the AIA Architecture Billings Index

The Architecture Billings Index (ABI), produced by the AIA Economics & Market Research Group <http://www.aia.org/practicing/economics> , is a leading economic indicator that provides an approximately nine to twelve month glimpse into the future of nonresidential construction spending activity. The diffusion indexes contained in the full report are derived from a monthly “Work-on-the-Boards” survey that is 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 as compared to the prior month, and the results are then compiled into the ABI.  These monthly results are also seasonally adjusted to allow for comparison to prior months. The monthly ABI index scores are centered around 50, with scores above 50 indicating an aggregate increase in billings, and scores below 50 indicating a decline. The regional and sector data are formulated using a three-month moving average. More information on the ABI and the analysis of its relationship to construction activity can be found in the White Paper Architecture Billings as a Leading Indicator of Construction: Analysis of the Relationship Between a Billings Index and Construction Spending on the AIA web site.

 About The American Institute of Architects

For over 150 years, members of the American Institute of Architects have worked with each other and their communities to create more valuable, healthy, secure, and sustainable buildings and cityscapes.  Members adhere to a code of ethics and professional conduct to ensure the highest standards in professional practice.  Embracing their responsibility to serve society, AIA members engage civic and government leaders and the public in helping find needed solutions to pressing issues facing our communities, institutions, nation and world. Visit www.aia.org.

         
 

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Comments on: "Architecture Billings Index shows nominal increase"

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The Blame Game: Greed at bottom line

While there is plenty of blame to hand around, those who flooded the market with homes and sold them based on spurious lending standards are the merchant home builders. This is the largest percentage of homes built on an annual basis. The custom home builders and architects were also catching the wave with increased luxury specs and custom designs but the real culprit was in starter to move up product. This created the main wrench in the works. The suburbs are littered with single family spec homes right now. The engine has stopped running at this point due to big money in the form of corporate mass production firms trying to gain share over each other at a furious pace. This also occured in the lending institutions who must have known that the predicament we face now was imminent. Yes, commercial architects and contractors were also busy flooding the market with office and retail space and are now getting hit by the domino effect. It started with housing though. CNN reports today that "Homebuilders may not recover". Most financial blogs see this outcome as well. Architects, mortgage bankers, real estate agents, engineers, builders, developers, subcontractors, materials suppliers are pretty much going extinct. The communities in which they are eking out their last days are suffering due to lack of economic activity that these groups supported. Meanwhile our respective industry elected officials are apparently not capable of pleading our case nationally. Nothing is being done to loosen the grip of over the top qualification standards, unrealistic appraisals, and receivers of property who would rather sit on everything than move it. The national government bailed out the car companies and banks but have not addressed the most pressing issue in our economy: foreclosures, lack of jobs, and the dying construction industry.

The Blame Game: Greed at bottom line

While there is plenty of blame to hand around, those who flooded the market with homes and sold them based on spurious lending standards are the merchant home builders. This is the largest percentage of homes built on an annual basis. The custom home builders and architects were also catching the wave with increased luxury specs and custom designs but the real culprit was in starter to move up product. This created the main wrench in the works. The suburbs are littered with single family spec homes right now. The engine has stopped running at this point due to big money in the form of corporate mass production firms trying to gain share over each other at a furious pace. This also occured in the lending institutions who must have known that the predicament we face now was imminent. Yes, commercial architects and contractors were also busy flooding the market with office and retail space and are now getting hit by the domino effect. It started with housing though. CNN reports today that "Homebuilders may not recover". Most financial blogs see this outcome as well. Architects, mortgage bankers, real estate agents, engineers, builders, developers, subcontractors, materials suppliers are pretty much going extinct. The communities in which they are eking out their last days are suffering due to lack of economic activity that these groups supported. Meanwhile our respective industry elected officials are apparently not capable of pleading our case nationally. Nothing is being done to loosen the grip of over the top qualification standards, unrealistic appraisals, and receivers of property who would rather sit on everything than move it. The national government bailed out the car companies and banks but have not addressed the most pressing issue in our economy: foreclosures, lack of jobs, and the dying construction industry.

Too much inventory/foreclosures - corporate greed

While there is plenty of blame to hand around, those who flooded the market with homes and sold them based on spurious lending standards are the merchant home builders. This is the largest percentage of homes built on an annual basis. The custom home builders and architects were also catching the wave with increased luxury specs and custom designs but the real culprit was in starter to move up product. This created the main wrench in the works. The suburbs are littered with single family spec homes right now. The engine has stopped running at this point due to big money in the form of corporate mass production firms trying to gain share over each other at a furious pace. This also occured in the lending institutions who must have known that the predicament we face now was imminent. Yes, commercial architects and contractors were also busy flooding the market with office and retail space and are now getting hit by the domino effect. It started with housing though. CNN reports today that "Homebuilders may not recover". Most financial blogs see this outcome as well. Architects, mortgage bankers, real estate agents, engineers, builders, developers, subcontractors, materials suppliers are pretty much going extinct. The communities in which they are eking out their last days are suffering due to lack of economic activity that these groups supported. Meanwhile our respective industry elected officials are apparently not capable of pleading our case nationally. Nothing is being done to loosen the grip of over the top qualification standards, unrealistic appraisals, and receivers of property who would rather sit on everything than move it. The national government bailed out the car companies and banks but have not addressed the most pressing issue in our economy: foreclosures, lack of jobs, and the dying construction industry.