AIA reports slight contraction in Architecture Billings Index

The Architecture Billings Index (ABI), produced by the AIA Economics & Market Research Group, is a leading economic indicator that provides an approximately nine- to twelve-month glimpse into the future of nonresidential construction spending activity. The diffusion indexes contained in the full report are derived from a monthly “work-on-the-boards” survey that is 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 as compared to the prior month, and the results are then compiled into the ABI. These monthly results are also seasonally adjusted to allow for comparison to prior months. The monthly ABI index scores are centered around 50, with scores above 50 indicating an aggregate increase in billings, and scores below 50 indicating a decline.

Following a generally positive performance in 2015, the Architecture Billings Index has begun this year modestly dipping back into negative terrain. The AIA reported the January ABI score was 49.6, down slightly from the mark of 51.3 in the previous month. This score reflects a minor decrease in design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 55.3, down from a reading of 60.5 the previous month.

“The fundamentals are mostly sound in the nonresidential design and construction market,” said AIA Chief Economist, Kermit Baker, Hon. AIA, PhD. “January was a rocky month throughout the economy, with falling oil prices, international economic concerns, and with steep declines in stock market valuations in the U.S. and elsewhere. Some of the fallout of this uncertainty may have affected progress on design projects.”

Key January* ABI highlights:

• Regional averages: West (50.8), Northeast (50.4), South (50.3), Midwest (48.9),
• Sector index breakdown: multifamily residential (51.9), commercial / industrial (50.5), institutional (49.9), mixed practice (49.0)
• Project inquiries index: 55.3
• Design contracts index: 50.9

The regional and sector categories are calculated as a 3-month moving average, whereas the national index, design contracts and inquiries are monthly numbers.

* Every January the AIA research department updates the seasonal factors used to calculate the ABI, resulting in a revision of recent ABI values.