Architecture Billings Index Falls Deeper Into Contractionary Territory in May

Following the first negative reading in five months, the Architecture Billings Index (ABI) suffered a significant drop in May.

As a leading economic indicator of construction activity, the ABI, produced by the American Institute of Architects (AIA), reflects the approximate 9- to 12-month lag time between architecture billings and construction spending.

AIA reported the May ABI score was 45.8, following a mark of 48.4 in April. 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 54.0, down slightly from mark of 54.4 the previous month.

“For the second year in a row, we’re seeing declines in springtime design activity after a healthy first quarter,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “Given the ongoing uncertainly in the economic outlook, particularly the weak job growth numbers in recent months, this should be an alarm bell going off for the design and construction industry. The commercial/industrial sector is the only one recording gains in design activity at present, and even this sector has slowed significantly. Construction forecasters will have to reassess what conditions will look like moving forward.”

Key May ABI highlights:

* Regional averages: Northeast (48.6), West (47.6), Midwest (46.8), South (46.1)
* Sector index breakdown: commercial / industrial (50.7), multi-family residential (48.9), institutional (45.6), mixed practice (41.5)
* Project inquiries index: 54.0

Craig DiLouie

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