Still not entering into the positive phase, the American Institute of Architects’ (AIA) Architecture Billings Index (ABI) increased for the third straight month in August. 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 AIA reported the August ABI score was 48.2, up slightly from a reading of 47.9 the previous month. This score reflects a continued decline in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry index was also up, moving from 53.1 to 54.6.
“Project cancellations, regardless of when they happen in the design phase, continue to be the main road block to recovery for the construction sector,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “Numerous projects have been put on hold indefinitely over the last several months with little hope that they will be resumed. Work that is being done is more likely smaller renovation projects, as opposed to new buildings.”
Key August ABI highlights:
o Regional averages: Northeast (50.9), Midwest (49.2), West (45.8), South (45.3)
o Sector index breakdown: commercial / industrial (50.6), ), multi-family residential (46.9), institutional (46.0), mixed practice (42.6)
o Project inquiries index: 54.6
LightNOW’s take: AIA says the main impediment to recovery is a lack of available financing for construction projects. I thought we gave nearly a trillion dollars to the banks whose greed and gross negligence helped get us into this mess in the first place. Can somebody explain to me why they are not being required to put that capital into circulation to stimulate the economy?
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