AIA Architecture Billings Index improves slightly, but remains negative

The American Institute of Architects' Architecture Billings Index (ABI) posted its third consecutive month of improved activity, but still represented the seventh consecutive month with negative scores, indicating that the economic outlook for U.S. architecture firms remains dire.

As a leading economic indicator of construction activity, the ABI shows an approximate 9- to 12-month lag time between architecture billings and construction spending.

The AIA reported the August ABI rating was 47.6, up slightly from the 46.8 mark in July (any score above 50 indicates an increase in billings) and the 46.1 mark in June. The inquiries for new projects score was 52.4, down from 54.6 in July, but still up from 51.8 in June and 46.5 in May.

"The recent figures over the last quarter are no real surprise given the overall state of the economy," said AIA Chief Economist Kermit Baker. "The news for industries affected by the construction industry is that looking back 12 to 18 months, the numbers were extremely healthy. That means many of those projects are currently in or entering the construction phase so there should still be demand for labor and building materials, and later on interiors, computer equipment and the like."

The ABI breaks down by sector as follows: Institutional construction (52.2, down from 53.6 in July), commercial/industrial projects (47.5, down from 48.8 in July), mixed practice (44.8, down from 45.6 in July).

Clearly, things remain bleak for the AEC industry as we enter the fourth quarter of 2008. The uncertainty surrounding the presidential election and the U.S. economy only makes things more unsteady.

Ed