Architecture Billings Index Points to Continued Struggles for Construction Industry

Another stall in the recovery for the construction industry as the Architecture Billings Index (ABI) dropped to its lowest level since June. As a leading economic indicator of construction activity, the ABI reflects the approximate nine- to 12-month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the August ABI rating was 41.7, down slightly from 43.1 in July. This score indicates a decline in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry score was 55.2.

“While there have been occasional signs of optimism over the last few months, the overwhelming majority of architects are reporting that banks are extremely reluctant to provide financing for projects, and that new equity requirements and conservative appraisals are making it even more difficult for developers to get loans,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “Until the anxiety within the financial community eases, these conditions are likely to continue.”

Key August ABI highlights:

* Regional averages: Northeast (45.2), South (44.1), Midwest (43.0), West (34.5),
* Sector index breakdown: commercial / industrial (45.6), multi-family residential (43.4), mixed practice (41.4), institutional (37.5)
* Project inquiries index: 55.2

Craig DiLouie

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