Architectural billing index reverts back into negative territory


Following the first positive reading since January 2008, the Architecture Billings Index (ABI) dropped nearly two points in October. 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 October ABI score was 48.7, down from a reading of 50.4 the previous month. This score reflects a decrease in demand for design services (any score above 50 indicates an increase in billings).

Fortunately inquiries for new projects remain extremely high said AIA. The new projects inquiry index was 61.7, down slightly from a nearly three-year high mark of 62.3 in September.

“This is not altogether that surprising,” said AIA Chief Economist Kermit Baker. “We were anticipating a slow recovery period and it is likely that there will be some fits and starts before conditions show consistent improvement. Right now, reluctance from lending institutions to provide credit for construction projects and a sluggish economy are the main impediments to a revival of the design and construction industry.”

◦Regional averages: Northeast (54.5), Midwest (51.8), South (48.6), West (44.3)

◦Sector index breakdown: commercial / industrial (54.5), institutional (50.8), multi-family residential (49.1), mixed practice (43.2)

◦Project inquiries index: 61.7

The Architecture Billings Index (ABI)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. Read more.