Wednesday, August 20, 2008

AIA Architecture Billings Index shows decrease in billings for sixth straight month

The American Institute of Architects' Architecture Billings Index (ABI) posted its highest score since January, but the numbers announced earlier today represented the sixth consecutive month with negative scores, indicating that the economic outlook for U.S. architecture firms remains bleak.

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

"Financing for new projects continues to be a problem," said AIA Chief Economist Kermit Baker. "Many projects are being reconsidered due to construction cost increases. And while there are a good number of projects still in the queue, owners are taking longer to proceed to the next phase of the design process."

The ABI breaks down by sector as follows: Institutional construction (53.6, up from 51.6 in June, indicating a continued increase in the amount of work on government buildings, schools, and hospitals), commercial/industrial projects (48.8, up from 45.8 in June and 39.7 in May), mixed practice (45.6, up from 44.1 in June).

Interestingly, while the ABI remains in a slump, many large, publicly traded AEC firms posted positive quarterly results in their most recent filings. And M&A activity shows no signs of letting up. Yet, some firms continue to reduce their workforce through layoffs and attrition.

It's hard to draw any real conclusions from all this other than the fact that the AEC industry is not immune to the stops and starts of the U.S. economy at large. To learn more about the industry outlook for the rest of 2008 and 2009, check out the September issue of PSMJ.


No comments:

Follow @PSMJ_Resources