ABI

Architecture Billings Index: Growth slumps, but remains positive

National
Billings (Blue), Inquiries (Red) and Design Contracts (Green) for the past 14 months. (Courtesy AN)
Billings (Blue), Inquiries (Red) and Design Contracts (Green) for the past 14 months. (Courtesy AN)

Now on a six-month streak, the Architecture Billings Index (ABI) has stayed positive. For July, the American Institute of Architects (AIA) reported a score of 51.5, down from 52.6 in the previous month. While overall the score signalled good news, the Northeast and West regions dipped below 50. The South continued its strong run of form, with its index rising to 56.9. Growth in the Midwest also recovered from a score of 48.6 last month, posting 50.1 for July.

Billings by sector: Residential (Orange), Commercial/Industrial (Blue), Institutional (Red) and Mixed Use (Green) for the past 14 months. (Courtesy AN)

Billings by sector: Residential (Orange), Commercial/Industrial (Blue), Institutional (Red) and Mixed Use (Green) for the past 14 months. (Courtesy AN)

The ABI, the leading economic indicator of construction activity, reflects a 9 to 12 month lead time between architecture billings and construction spending. The national index, design contracts, and inquiries are calculated monthly, while the regional and sector categories are calculated as a three-month moving average. The index runs on a scale from 0-100 and scores above 50 suggest growth while anything below implies negativity in the market.


July also saw both inquiries and design contracts report positive figures: 51.8 and 57.5, respectively. Previously, design contracts had fallen to 49.7, having enjoyed comfortable growth for well over year before hand. Inquiries, on the other hand, while nearly always strong (the last figure below a score of 50 was in July 2009) fell from 58.6 to 57.5.

Billings by region: Northeast (Orange), Midwest (Blue), South (Red) and West (Green) for the past 14 months. (Courtesy AN)

Billings by region: Northeast (Orange), Midwest (Blue), South (Red) and West (Green) for the past 14 months. (Courtesy AN)

“The uncertainty surrounding the presidential election is causing some funding decisions regarding larger construction projects to be delayed or put on hold for the time being,” said AIA Chief Economist, Kermit Baker, Hon. AIA, PhD. “It’s likely that these concerns will persist up until the election, and therefore we would expect higher levels of volatility in the design and construction sector in the months ahead.”

Key July ABI highlights:

  • Regional averages: South (56.9), Midwest (50.1), Northeast (49.3), West (49.2)
  • Sector index breakdown: multi-family residential (55.2), institutional (50.7), mixed practice (50.5), commercial / industrial (50.3)
  • Project inquiries index: 57.5
  • Design contracts index: 51.8

Due to small sample sizes, the regional and sector categories are calculated as a 3-month moving average. On the other hand, for the national index, design contracts and inquiries are monthly figures.

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