Architecture billings index takes turn for the worse

After showing signs of stabilization over the last three months, the Architecture Billings Index (ABI) plunged nearly five points in June. 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 37.7, far lower than the 42.9 the previous month. This score indicates a sharp decline in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry score was 53.8, the fourth straight month with a score in the mid-50’s.
 
“It appears as though we may have not yet reached the bottom of this construction downturn,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “Architecture firms are struggling and concerned that construction market conditions will not even improve as soon as next year. There has also been little movement in terms of stimulus funding allocated for design projects having the desired impact of leading to new work.”
 
Key June ABI highlights:
 
Regional averages: Northeast (42.8), South (40.5), West (39.9), Midwest (36.2)
Sector index breakdown: mixed practice (43.5), multi-family residential (42.7), commercial / industrial (39.5), institutional (37.0)
Project inquiries index: 53.8
 
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.