Architecture Billings Index Falls Back After
Three Months of Improving Conditions
June 25, 2010
After three straight months of improving conditions, the American
Institute of Architects (AIA) Architecture Billings Index
(ABI) fell nearly three points in May. As an economic indicator
of construction activity, the ABI reflects the approximate nine
to twelve month lag time between architecture billings and construction
spending. AIA reported the May ABI rating was 45.8, down substantially
from a reading of 48.4 the previous month. This score reflects a
continued decline in demand for design services (any score above
50 indicates an increase in billings), and comes on the heels of
the highest score since January 2008 when revenue at architecture
firms headed into recession (CLICK
HERE for related story).
This dip is somewhat of a surprise since it appeared that
conditions were pointing towards a recovery, says Kermit Baker,
PhD, Hon. AIA, AIA chief economist. The overriding issue affecting
the entire real estate sector is unusual caution on the part of
lending institutions to provide credit for construction projects
that apparently would be successful in this economic environment.
He adds, An amendment has passed the House that would help
lenders and borrowers as they attempt to work out their loans under
terms that are mutually acceptable, avoid large numbers of commercial
foreclosures, and free up credit that can be used more constructively.
If this passes the in Senate then some much needed relief will available
for the struggling design and construction industry.
Key May ABI highlights include:
- Regional averages: Northeast - 50.6, Midwest - 48.5, South -
45.9, West - 42.9
- Sector index breakdown: commercial/industrial - 51.3, multi-family
residential - 46.9, mixed practice - 46.8, institutional - 43.4
- Project inquiries index: 59.6
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