The Architecture Billings Index showed renewed strength in January, with a jump to 54.2 from 51.2 in December (any score above 50 indicates positive growth). All four regions were in positive territory with the Midwest leading at 54.4, the long struggling West showing strength at 53.4, the South came in at 51.7, and the Northeast at 50.3. The Index posted the strongest gains since November 2007. Inquiries for new projects also surged, rising to 63.2 from 57.9 in December. “We have been pointing in this direction for the last several months, but this is the strongest indication that there will be an upturn in construction activity in the coming months,” said AIA Chief Economist, Kermit Baker, in a statement. “But as we continue to hear about overall improving economic conditions and that there are more inquiries for new design projects in the marketplace, a continued reservation by lending institutions to supply financing for construction projects is preventing a more widespread recovery in the industry.” By sector, all areas were in positive territory: mixed practice (54.9), multi-family residential (54.5), commercial/industrial (52.0), and institutional (50.2).
Posts tagged with "Architecture Billings Index":
The AIA's Architectural Billings Index (ABI) stayed in positive territory for the fifth straight month in December with a score of 52.0 (any score above 50 indicates growth). The level of growth edged down slightly from November's mark of 53.2. By region, the Midwest is currently performing the best (55.7), followed by the Northeast (53.1), and the South (51.2). The West remains in negative territory (49.6). “While it’s not an across the board recovery, we are hearing a much more positive outlook in terms of demand for design services,” said AIA Chief Economist, Kermit Baker, in a statement. Federal budget cuts, however, could impact the recovery. “Moving into 2013 we are expecting this trend to continue and conditions improve at a slow and steady rate. That said, we remain concerned that continued uncertainty over the outcomes of budget sequestration and the debt ceiling could impact further economic growth,” Baker said. By sector, commercial/industrial led with 53.4, followed by mixed practice at 53.0, institutional at 50.9, and multi-family residential at 50.5. Project inquiries were also in positive territory at 59.4, down just slightly from November's 59.6. The National Association of Home Builders is also reporting growth and forecasting greater gains:
Multifamily production, which has posted a 273 percent gain from its fourth quarter trough of 82,000 units in 2009 to 306,000 units in the final quarter of 2012, is expected to reach what is considered a normal level of production by 2014. The single-family market, which has the farthest to go, was running at 44 percent of normal production in the fourth quarter of 2012. Single-family starts are expected to steadily rise to 52 percent of what is considered a typical market by the fourth quarter of this year and 70 percent of normal by the fourth quarter of 2014. NAHB is forecasting 949,000 total housing starts in 2013, up 21.5 percent from 781,000 units last year.
A fourth straight month of increased billings by AIA members signals the architectural economy may finally have turned the corner. The Architectural Billings Index (ABI) ticked up to 53.2 from last month's 52.8 (any score above 50 indicates an increase in demand for design services). Project inquiries also rose slightly to 59.6 from 59.4. “These are the strongest business conditions we have seen since the end of 2007 before the construction market collapse,” said AIA chief economist, Kermit Baker. Activity was greatest in the Northeast (56.3) and the Midwest (54.4). The South remained in positive territory at 51.1, while the South dipped into a slight decline at 49.6, down from the previous month's 51.8. The AIA cautioned that the A/E/C sector's growth could be drastically undercut if the country goes off the so-called "fiscal cliff." Uncertainty about spending cuts and tax increases have already put numerous projects on hold.
Heading into the holidays, the AIA has more good economic news to report: the Architectural Billings Index (ABI) has recorded a third straight month of growth. The October score was 52.8, up from September's 51.6 (any score above 50 indicates a growth in billings). The uptick reflects improving conditions in the housing market and real estate more broadly. All four regions were in positive territory, with the South leading at 52.8, followed by the Northeast at 52.6, the West at 51.8, and the Midwest at 50.8. By sector, multi-family housing performed the strongest (59.2), followed by mixed practice (52.4), and institutional (51.4). The industrial/commercial sector lagged behind in negative territory (48.0) “With three straight monthly gains – and the past two being quite strong – it’s beginning to look like demand for design services has turned the corner,” said AIA Chief Economist, Kermit Baker, said in a statement. Project inquiries also grew, from 57.3 in September to 59.4 in October.
The AIA has released its Architecture Billings Index (ABI) for September, and the news looks good. According to the organization, the ABI score went to 51.6, up from 50.2 in August (any score above 50 reflects an increase in billings). The spike marks the fastest increase in the demand for design services since 2010. The AIA tied the upswing in billings to an increased demand for rental housing. “Going back to the third quarter of 2011, the multi-family residential sector has been the best performing segment of the construction field,” said AIA Chief Economist Kermit Baker. “With high foreclosure levels in recent years, more stringent mortgage approvals and fewer people in the market to buy homes there has been a surge in demand for rental housing. The upturn in residential activity will hopefully spur more nonresidential construction.” As a leading economic indicator of construction activity, ABI reflects the approximate nine to twelve month lag time between architecture billings and construction spending. The diffusion indexes contained in the full report are derived from a monthly “Work-on-the-Boards” survey that is sent to a panel of AIA member-owned firms. The organization asks participants whether their billings increased, decreased, or stayed the same in the month that just ended as compared to the prior month, and the results are then compiled into the ABI. Any ABI score above 50 indicates an aggregate increase in billings. Scores below 50 indicate a decline. Here’s how the ABI broke down regionally in September: West (53.4), South (51.9), Northeast (49.5), Midwest (47.2). Here’s how the index broke down by sector: multi-family residential (57.3), institutional (51.0), commercial/industrial (48.4), mixed practice (47.8). The new projects inquiry index—an indicator of client interest in design services—also showed some growth. It came in at 57.3, compared to a mark of 57.2 the previous month.
The AIA's monthly Architecture Billings Index (ABI) for July came in with a disappointing 48.7 (any score below 50 indicates a decline in billings for design activity). The news was not all bad though. The ABI was up significantly from last month's score of 45.9. “Even though architecture firm billings nationally were down again in July, the downturn moderated substantially,” said AIA Chief Economist, Kermit Baker. “As long as overall economic conditions continue to show improvement, modest declines should shift over to growth in design activity over the coming months.” At the regional level, the South, a region battered by the Great Recession, was the only area in positive territory, skyrocketing up to a score of 52.7 from the previous month's 47.6. The Midwest clocked in at 46.7, the West lagged with 45.3, and Northeast continued its steady decline to 44.3, the lowest score for that region since February 2010. By sector, multi family residential (51.4) out-paced mixed-practice (49.1), commercial/industrial (48.4), and institutional (46.6). Inquiries rebounded to 56.3, up from last month's 54.4.
The Architectural Billings Index (ABI) for June remained in negative territory for the third month in a row. Last month AIA chief economist Kermit Baker expressed concern that the summertime doldrums might mirror a 2011 trend when the ABI lulled after an initially healthy first quarter. Now it looks as though the index is doing just that. “While not all firms are experiencing negative conditions, a large share is still coping with a sluggish and erratic marketplace,” Baker said in a statement. All of the regions of the country and all industry sectors remained in negative territory with the overall index barely budging from May’s 45.8, with June registering at 45.9 (any score below 50 reflects a decrease). The West continued with its drawn out doldrums, slumping further from 47.6 to 44.3. The Northeast’s 48.6 slipped to 46.4, while the Midwest moved from 46.8 to 48.0, and the South went from 46.1 to 47.6. The sector breakdown didn’t look much better. The commercial sector fell from 50.7 to 46.9, institutional went from 45.6 to 46.0, mixed practice went from 41.5 to 45.9, and multi-family residential went from 48.9 to 49.0. The constant silver lining remains the project inquiries index, which lifted up a smidge from 54.0 to 54.4.
“It’s like déjà vu all over again,” AIA chief economist Kermit Baker said of the steep springtime drop reflected in May’s Architectural Billings Index (ABI). Baker was referring to the trend from 2011, when design activity took a substantial hit after an initially healthy first quarter. “But we don’t want to have a repeat of last year,” he added referring to the sluggish numbers that continued to shadow the profession through the fall. The new numbers were the worst since October and, Baker said, reflect trends in the larger economy. All of the regional sectors took on water, as the overall score went from a low of 48.4 in April to an even lower 45.8 in May (any score below 50 reflects a decrease). The South was hit the hardest with a drop to 46.1 from 49.0. The Midwest wasn’t far behind with a deeper dip to 46.8 from 50.1. The ever-lagging West went to 47.6 from 46.6. And the Northeast dropped to 48.6 from 51.0. The sector breakdown saw commercial/industrial stay in positive territory at 50.7, but not as strong as last month’s 53.8. Multi-family residential fell to 48.9 from 50.5, institutional went from to 45.6 from 46.6, and mixed practice went to 41.5 from 45.0. If anything, project inquiries remain something of contiguous silver lining, staying in positive territory for months at a time. May’s score was 54.0, a mild shift from April’s 54.4. But the reality on the ground belies the inquiry trend. “Last month we were willing to believe it was seasonality,” he said. “But there’s something more than weather related activity; it moved beyond that and it’s not incidental that we had a negative jobs report.” In addition to national issues, like jobs, Baker said that certain international trends that spook the larger market find their way into the ABI. He cited uncertainty in Europe and slowdowns in China and India as outside factors. When asked if the ebb and flow just at the fifty mark was the new normal Baker said that the industry, along with the country, is actually in recovery, albeit a very slow one. He noted that he’s hearing fewer negative reports on getting financing. “I don’t think we peaked out, but I think we’ll see longer term growth,” he said.
For the past five months things were looking up for the Architecture Billings Index. Until now. Granted, the index was merely teetering on the positive side of the spectrum at 50.4 for March (any score above 50 reflects an increase), so it didn’t have far to drop into the negative territory of 48.4 for April. Despite the five-month positive stint, throughout the period AIA Chief Economist, Kermit Baker urged cautious optimism in what has clearly been a tepid recovery. In a statement released today, he said that the decline in demand for design services is not surprising considering continued volatility in the overall economy. “Favorable conditions during the winter months may have accelerated design billings, producing a pause in projects that have moved ahead faster than expected,” he said. The regional breakdown took the Northeast to the top of the heap with a score of 51.0, down from last months 53.9. Likewise, the Midwest stayed positive at 50.1, but not quite as strong as the previous month’s 54.1. The South dropped into negative territory at 49.0, down from a positive stance at 50.1. Meanwhile, the ever-sluggish West stayed negative at 48.0, not a much of a shift from last month’s 46.6. In the sector breakdown, the commercial/industrial sector, as usual, took the lead with a positive showing of 53.8, a shift from March’s 56.0. Multi-family residential hovered around the edge at 50.5, not far from last month’s 51.9. Institutional stayed negative at 46.6, a slight change from 47.6. Mixed practice also remained low at 45.0, down from 47.2. The new projects inquiry index checked in at 54.4, down from a mark of 56.6 in March.
The Architecture Billings Index (ABI) has registered promising gains since late last fall, and, according to the AIA's latest report on March billings, the ABI continues to find its footing in positive territory—but just barely. The overall March score was 50.4, indicating slight growth in demand for services (any score above 50 reflects increase in billings) but less growth than the previous month (the ABI was 51.0 in February). Still, Kermit Baker, the AIA's chief economist, was hopeful. "We are starting to hear more about improving conditions in the marketplace, with a greater sense of optimism that there will be greater demand for design services,” Baker said in a statement, in which he also made an effort to manage expectations, noting that there was not progress across-the-board. "There are still a number of architecture firms struggling, so progress is likely to be measured in inches rather than miles for the next few months.” Indeed, the new projects inquiry index for March was 56.6, significantly down from February's 63.4, and regional scores, which are three-month moving averages, remained mostly steady: the Midwest registered 54.1 (down from 56.0 in February); the Northeast saw the most improvement with its score of 53.9 (51.0 in February); the South averaged 50.1 (51.3 in February); while the West continued to flat-line in negative territory, remaining at 46.6. Commercial/industrial billings charged ahead, registering 56.0 in March (up from 55.1), but unfortunately no other sector followed this lead: residential dropped to 51.9 from 53.3; institutional saw a decline, slipping to 47.7 from 50.3; and mixed practice continued to hover below 50, registering 47.2 after February's 46.3.
With the moody Architectural Billings Index landing in positive territory for the fourth straight month in February, the architectural community might begin to exhale a sigh of relief. Project inquiries alone saw its highest spike since 2007, up from 61.2 to 63.4 (anything over 50 indicates an increase in billings). But with the wild swings of 2011 still fresh, AIA’s chief economist Kermit Baker steadfastly noted caution, particularly on the part of clients. “The factors that are preventing a more accelerated recovery are persistent caution from clients to move ahead with new projects, and a continued difficulty in accessing financing for projects that developers have decided to pursue,” Baker said in a statement. Nevertheless, Baker acknowledged that this month’s index was more good news for the design and construction industry. The rally was led by the commercial/industrial sector, which jumped from 52.2 to 55.1. This was followed by residential at 53.3, which came up from 52.6. But the institutional sector hovered at 50.3 from 51.1. Mixed practices missed their mark again, staying below 50 at 46.3, not much of a change from January’s 46.1. Regionally, the Midwest took the lead once again at 56.0, up from 53.7. The South held their own at 51.3, not much different than January’s 51.6. The Northeast bumped up to 51.0 from 50.7. Unfortunately, the West didn’t join the party this time around; February’s 46.6 barely budged from January’s 45.6.
Today the AIA released the December results of its Architecture Billings Index (ABI), and we're happy to report that the overall score is holding steady in positive territory for the second month in a row. Like November, December's score came in at 52 (anything over 50 is positive). But AIA Chief Economist Kermit Baker remains circumspect, noting “We saw nearly identical conditions in November and December of 2010 only to see momentum sputter and billings fall into negative territory as we moved through 2011, so it’s too early to be sure that we are in a full recovery mode.”