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Negative Conditions Persist In Architecture Billings Index

August 01, 2010

There was a negligible increase in the Architecture Billings Index (ABI) last month. 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. The American Institute of Architects (AIA) reported the June ABI rating was 46.0, up slightly from a reading of 45.8 the previous month. This score reflects a continued decline in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry index increased from 55.5 to 57.7.

“The steep decline in nonresidential property values has slowed investment in new facilities,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “Conditions at architecture firms continue to remain very soft, but we’re optimistic that they will improve before the end of the year.”

Key June ABI highlights:

◦Regional averages: Northeast (47.7), South (46.7), Midwest (46.3), West (43.6)

◦Sector index breakdown: commercial / industrial (50.6), multi-family residential (46.5),

◦institutional (45.0), mixed practice (44.7)

◦Project inquiries index: 57.7

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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