Posts tagged with "Kermit Baker":

Placeholder Alt Text

Architectural Billings Index Continues Slump With Third Month in the Red

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.
Placeholder Alt Text

Busted Up: Billings Index Plunges Amid Global Economic Uncertainty

“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.
Placeholder Alt Text

Billings Bucks Upward Trend

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.
Placeholder Alt Text

Billings Stays Positive for Fifth Consecutive Month

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.
Placeholder Alt Text

Billings Remains in the Black Four Months in a Row

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.

AIA Billings Index Stays Positive

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.”
Placeholder Alt Text

August Billings Index Bounces Back

They’re back! Positive numbers for the Architecture Billings Index (ABI) jumped up in August to 51.4 from a dismal 45.1 in July where it had been stewing in negative land for months. (Anything over 50 indicates positive growth.) Together with a sharp rise as well in Project Inquiries to 56.9 (up from 53.7), the good news seems cautiously solid. “This turnaround in demand for design services is a surprise,” said AIA Chief Economist Kermit Baker. Regional averages, however, remained below the positive bar across the country indicating that firms generally are still struggling. These numbers predate the next injection of stimulus money—whatever shape it takes—which will be sure to give another jolt. Unless, of course, billings are tracking the roller-coaster antics of the stock market. “The stock market is doing what the economy is doing which is not moving solidly in one direction, either way,” Baker said by phone. “The stop-start that we have seen over the past two years is going to stay with us. I would love to believe that these latest numbers are the start of a Grand Recovery. And maybe they are. The evidence is just not there yet to be sure.”
Placeholder Alt Text

Billings Bummer Yet Again in July

For the fifth straight month the Architecture Billings Index (ABI) has posted negative figures, with the only positive number on the chart coming from billing inquiries. The overall number dropped from 46.3 in June to 45.1 in July (any ABI number below 50 is considered negative). AIA Chief Economist Kermit Baker once again pointed to the larger economy as the source of industry woes. “The stuff that’s going on with the national level is consistent with what we’re experiencing,” said Baker, adding that given the current political situation he didn’t think another stimulus package would make it through Congress. “The politics of that is going to be tough; there’s a problem with increased spending,” he said. Even if it did, the last package didn’t really trickle down to the industry. “I have a hunch if there’s a chance it would go through, it would look a lot like the last stimulus and architects didn’t get a lot from that,” he said. There were no regional leaders this time out, with all areas falling below 50. The West went from 51.7 to 46.6, the Midwest 44.6 to 44.9, the South 47.3 to 46.9, and the Northeast went from 47.6 to 46.4. In the sector breakdown, mixed practices dove from 51.7 to 47.1, while commercial/institutional slipped from 50.0 to 47.9. Multi-family residential fell from 49.6 to 44.7, and institutional shifted from 45.9 to 47.2. Meanwhile, last month’s light at the end of the tunnel, a project inquiry index of 58.1 got a lot smaller, falling to 53.7. While still a positive number, Baker said last month’s inquiries didn’t translate into good numbers for this month. “It’s going to take a broader turnaround in the economy,” he concluded.
Placeholder Alt Text

Notes from the AIA: Tepid Outlook for 2011

Yesterday we attended a sobering panel at the AIA convention entitled The Construction Outlook: Implications for Architecture Firms. Presented by the AIA's Chief Economist Kermit Baker and McGraw-Hill Construction's Vice President of Economic Affairs Robert Murray, the panel crystallized the problems that continue to plague the architecture profession. In short, while the downturn has ended, the upturn, which is indeed inching along, is coming along VERY slowly, or as Murray put it, we're facing "an extended bottom." Projected 2011 growth for U.S. construction starts is 1%, according to McGraw-Hill Construction. The high points are multi-family housing, which are projected to see a 22% gain, Manufacturing building, which could see a 24% gain, and commercial building, which is set to see an 11% jump. Other high points include urban infill, adaptive reuse, renovations, and sustainable design. Perhaps the biggest loser in the coming year will be public work, which is seeing cuts across the board due to debt issues. The AIA's Billing Index has edged just barely into slightly positive territory after three years of steady declines, said Baker. But overall the losses sustained over the last few years have been, as Baker put it, "monumental." Since 2009, he said, firms have cut about 30 percent of their pay-rolled employees, and that doesn't even include firms that have cut staff to part time or instituted furloughs. Firms are starting to hire contract employees, but still seem hesitant to hire full time staff, he said. "The industry is slowly, gradually recovering," said Murray. Or as Baker put it: "The upturn is going to be a good deal slower than the downturn."