The Architecture Billings Index (ABI), a leading economic indicator of nonresidential construction activity, posted a negative score again in June. This marks the first time since November 2003 that there were consecutive negative months for this index. Based on the approximately six to nine month lag time between architecture billings and construction spending, there could be a slow down in building activity near the end of the first quarter of 2007. The American Institute of Architects (AIA) reported the June ABI rating was 49.2 (any score below 50 indicates a drop in billings), just below the 49.6 mark in May.
“Because the index indicates only a slight easing in design activity for two consecutive months, this should not be viewed with too much alarm,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “That said, it should serve notice to the construction industry that there could be a slowdown in activity if this pattern continues over the next few months.” Key June ABI highlights:
Regional averages: South (55.3), Northeast (47.3), West (47.2), Midwest (46.8)
Sector index breakdown: institutional (57.1), commercial / industrial (54.3), residential (44.3), mixed (44.3)
Billings inquiries index: 56.7, down significantly from the 61.3 score in May
Baker added, “While the Architecture Billings Index is primarily indicative of the health of the nonresidential construction market, the decline in firm billings is largely the result of easing in residential activity. Both the commercial/industrial and institutional design sectors are healthy at present, with activity at institutional firms accelerating in June.” About the AIA Architecture Billings IndexThe 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. About The American Institute of ArchitectsFor almost 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. AIA members have access to the right people, knowledge, and tools to create better design, and through such resources and access, they help clients and communities make their visions real. www.aia.org