After three consecutive months of modest growth, the Architecture Billings Index (ABI), a leading economic indicator of construction activity, surged nearly three points in May. The American Institute of Architects (AIA) reported the May ABI was 55.0 (any score above 50 indicates an increase in billings), up from the 52.6 mark in April. With an approximate nine to twelve month lag time between architecture billings and construction spending, the forecast for the nonresidential construction market remains favorable throughout 2007 and into early 2008.
“This is second highest mark of the year behind January’s score of 57.9,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “Activity in the West is accelerating rapidly and all nonresidential construction sectors are experiencing an extended upturn. The residential numbers have been stabilizing recently, but that is attributed more to firms that are doing work on multi-family projects and may not portend a recovery for the overall housing market.”
Key May ABI highlights:
Regional averages: West (58.0), Northeast (53.6), South (53.3), Midwest (51.8)Sector index breakdown: residential (55.2), commercial / industrial (54.7), mixed practice (54.3), institutional (54.2)Inquiries index: 62.4
CIBC industrial multi-industry analyst, Christopher Glynn added, “For companies serving the nonresidential construction sector, the ABI’s unique position among other indicators, as tracking architectural billings, serves as a useful forward glimpse of construction activity. In this case, indications are that demand from nonresidential construction markets should continue to expand for the foreseeable future, a positive data point for companies in electrical equipment and other related markets.”