Architecture Billings Index Tumbles Three Points in April

Craig DiLouie June 17, 2011

Following several months of relatively positive business conditions, the Architecture Billings Index (ABI) fell almost three points in April. 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 April ABI score was 47.6, a precipitous decrease from a reading of 50.5 the previous month. This score reflects a sharp decrease in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 55.0, down from a mark of 58.7 in March, but still at a healthy level.

“The first question is whether this drop is a sign of an industry wide reversal in demand for design services or a bump in the road,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “The fact that most construction projects funded under the federal stimulus program have completed their design work, the anxiety around the possibility of a shutdown in the federal government in April, as well as the unusually severe weather in the Southeast had something to do with this falloff. However, the majority of firms are reporting at least one stalled project in-house because of the continued difficulty in obtaining financing. That issue continues to be the main roadblock to recovery.”

Key April ABI highlights:

Regional averages: Northeast (51.2), Midwest (51.1), South (48.3), West (47.7)
Sector index breakdown: multi-family residential (53.9), commercial / industrial (49.9), institutional (45.9) mixed practice (45.2)
Project inquiries index: 55.0