AIA Reports Decline in January’s Architectural Billings Index

Beginning its third year of negative conditions, the Architecture Billings Index (ABI) had a drop of almost three points in January. As a leading economic indicator of construction activity, the ABI reflects the approximate 9- to 12-month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the January ABI rating was 42.5, down sharply from a revised reading of 45.4 in December. This score indicates a continued decline in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry score was 52.5, down more than seven points.

“Projects are being delayed or cancelled because lending institutions are placing unusually stringent equity requirements on new developments,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “This is even happening to financially sound companies with strong credit ratings. This serious situation is being compounded by a skittish bond market, decreased tax revenues for publicly financed projects and declining property values–all which serve as deterrents for construction activity. Until these factors are resolved, the design and construction industry–which accounts for roughly 10% of GDP and is facing unemployment figures in excess of 20%–will continue to face deteriorating market conditions.”

Key January ABI highlights:

Regional averages: Midwest (48.0), Northeast (45.7), South (41.32), West (40.5)
Sector index breakdown: multi-family residential (50.1), commercial / industrial (44.9), institutional (43.1), mixed practice (40.3)
Project inquiries index: 52.5

Craig DiLouie

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