Architectural Billing Index reflects decrease in construction spending

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On the heels of a sizeable decrease in April, the Architecture Billings Index (ABI) slowed even further in May, The American Instutute of Architects (AIA) reports. 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. AIA reported the May ABI score was 47.2, a slight decrease from a reading of 47.6 the previous month. This score reflects a continued decrease in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 52.6, down from a mark of 55.0 in April, its lowest level in almost a year and a half.

“Whatever positive momentum that there had been seen in late 2010 and earlier this year has disappeared,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “The broader economy looks to be entering another soft spot, and certainly state budget constraints are adversely affecting the profession’s ability to work on institutional projects. But there is no denying that the prolonged credit freeze from lenders for financing commercial projects is the number one challenge to a recovery for the design and construction industry.”

Key May ABI highlights:

◦Regional averages: West (49.3), Northeast (47.6), South (47.5), Midwest (45.9)
◦Sector index breakdown: multi-family residential (53.6), mixed practice (49.1) commercial / industrial (46.5), institutional (44.9)
◦Project inquiries index: 52.6

About the AIA 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. Read More.

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