Another stall in the recovery for the construction industry as the Architecture Billings Index (ABI) dropped to its lowest level since June. The American Institute of Architects (AIA)  reported the August ABI rating was 41.7, down slightly from 43.1 in July. This score indicates a decline in demand for design services (any score above 50 indicates an increase in billings).
As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lag time between architecture billings and construction spending.
“While there have been occasional signs of optimism over the last few months, the overwhelming majority of architects are reporting that banks are extremely reluctant to provide financing for projects, and that new equity requirements and conservative appraisals are making it even more difficult for developers to get loans,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “Until the anxiety within the financial community eases, these conditions are likely to continue.”
Key August ABI highlights:
• Regional averages: Northeast (45.2), South (44.1), Midwest (43.0), West (37.5)
• Sector index breakdown: commercial / industrial (45.6), multi-family residential (43.4), mixed practice (41.4), institutional (37.5)
• New project inquiry score: 55.2
About the AIA Architecture Billings Index
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 nine to twelve 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. The regional and sector data is formulated using a three-month moving average.
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. By using sustainable design practices, materials, and techniques, AIA architects are uniquely poised to provide the leadership and guidance needed to provide solutions to address climate change. AIA architects walk the walk on sustainable design. Visit www.aia.org/walkthewalk .