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Wednesday, 20 June 2007 | Levent OZLER
Architecture Billings Index Surges Nearly Three Points
After three consecutive months of modest growth, the Architecture Billings Index (ABI), a leading economic indicator of construction activity, revealed a spike in design activity. The American Institute of Architects (AIA) reported the May ABI was 55.0 (any score above 50 indicates an increase in billings), up from the 52.6 mark in April. With an approximate nine to twelve month lag time between architecture billings and construction spending, the forecast for the nonresidential construction market remains favorable throughout 2007 and into early 2008.
"This is second highest mark of the year behind January's score of 57.9," said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. "Activity in the West is accelerating rapidly and all nonresidential construction sectors are experiencing an extended upturn. The residential numbers have been stabilizing recently, but that is attributed more to firms that are doing work on multi-family projects and may not portend a recovery for the overall housing market."
Key May ABI Highlights
- Regional averages: West (58.0), Northeast (53.6), South (53.3), Midwest (51.8)
- Sector index breakdown: residential (55.2), commercial / industrial (54.7), mixed practice (54.3), institutional (54.2)
- Inquiries index: 62.4
CIBC industrial multi-industry analyst, Christopher Glynn added, "For companies serving the nonresidential construction sector, the ABI's unique position among other indicators, as tracking architectural billings, serves as a useful forward glimpse of construction activity. In this case, indications are that demand from nonresidential construction markets should continue to expand for the foreseeable future, a positive data point for companies in electrical equipment and other related markets."
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 American Institute of Architects
For 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.
The American Institute of Architects: http://www.dexigner.com/directory/detail/186.html
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