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04.24.2008
It Gets Worse
AIA Billings Index hits lowest level ever, portends recession

The Numbers

The AIA’s Architecture Billings Index—the profession’s rough measure of monthly architectural outputhit the lowest level in its 13-year history in March, according to numbers released yesterday by the institute. The index continued a slide that began in January, which bodes ill for the architectural economy and the construction sector as a whole, because the design phase is generally first in the building process. Inquiries for new design projects also hit a record low.

AIA chief economist Kermit Baker, who has been tracking architectural productivity for almost two decades, warned that the numbers could mean one of the worst recessions for architects in recent memory. “We’ve seen an 11-point fall-off in the first quarter of the year and the prognosis for commercial construction later this year is not favorable at this point,” Baker said in a statement. “Aside from historically low project demand, all regions are showing very poor business conditions. This is not likely to reverse itself anytime soon.”

The index slid 2.1 points to 39.7. A reading of 50 means billings are constant; a reading over 50 means they are increasing, and under 50 means they are decreasing. By comparison, the index hit a record high of 62.9 in August 1998. Its previous low was 40.1, recorded in October 2001, a month after the September 11 attacks and at the end of the longest slide in the index’s history—a 15-month rout which began in January of that year and continued through the following March.

The decline this month was not as steep as in February, when the index tumbled 8.9 points, though it could still be months before things turn around. That inquiries, which do not always mimic billings, also sank to a new low of 48.0 could indicate a more systemic problem.

Still, many in the profession remain confident about their economic prospects. AN did a bit of forecasting in a story earlier this month, including an interview with Fredric Bell, executive director of the AIA New York chapter. Bell was bullish then and remains so now. “The numbers don’t tell the whole story,” Bell said in a phone interview from the United Nations, where he was attending a sustainability conference. “The people I talk to, and I talk to a lot of people, everyone’s busier than ever.”

Matt Chaban