Billings increase less than a point in December, still in negative territory

Inability to get financing main roadblock to recovery

January 20, 2010 |

On the heels of a more than three point drop in November, the Architecture Billings Index (ABI) had a negligible increase of less than one point in December. As a leading economic indicator of construction activity, the ABI reflects an approximate nine to twelve month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the December ABI rating was 43.4, up slightly from 42.8 in November. This score indicates a continued decline in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry score was 55.3, down more than three points.

"The main impediment to an economic turnaround for the design and construction industry remains frozen credit markets. We continue to hear that there are numerous viable projects out there awaiting financing," said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. "And the longer this situation persists, the more dire the news for the architecture profession which is struggling at unprecedented proportions."

Key December ABI highlights:

Regional averages: Northeast (48.6), Midwest (46.6), South (43.2), West (40.0)
Sector index breakdown: multi-family residential (51.0), institutional (44.2), commercial / industrial (42.7), mixed practice (38.1)
Project inquiries index: 55.3

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.

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