Wednesday, December 17, 2008

ABI Keeps Falling: Posts All-Time Low For Second Straight Month

When we wrote last month that "while some quarters believe that President-Elect Barack Obama will push an agenda of addressing America's infrastructure," that does seem to be true.

However, as we also wrote, "Fact is, it will be two more months before he even takes office and perhaps much longer than that before bills are introduced into Congress, debated, signed into law, and then funding appropriated for them."

That was reflected in today's news that the AIA's Architecture Billings Index hit its all-time low for the second straight month, again posting its lowest level since the survey began in 1995.

And, as we said last month, because the index is a leading indicator of construction activity, the ABI shows an approximate 9- to 12-month lag time between architecture billing and construction spending. This means we shouldn't expect to see much construction activity for the bulk of 2009.

The November ABI rating was 34.7, down from the 36.2 mark in October, and the 41.4 mark in September that was a six-point drop from August. Any score above 50 indicates an increase in billings, but it's been a long time since that has happened. The inquiries for new projects score was 38.3, also a historic low point.

"With mounting job losses, declines in retail sales, and travel cutbacks, the need for new commercial facilities has dropped considerably recently," said AIA Chief Economist Kermit Baker. "What's just as troubling is that the institutional sector-- schools, hospitals, and public buildings-- is also beginning to react to tighter credit conditions and a weakening economy."

Regionally, the ABI breaks down as follows: Northeast (39.5, down from 44.3 in October), South (36.8, down from 40.0 in October), Midwest (31.4, down from 37.4 in October), and West (33.5, down from 34.9 in October). Sector by sector, the ABI breaks down thusly: mixed practice (44.5, down from 45.1), institutional (40.8, down from 42.1), commercial/industrial (26.7, down from 33.6), and multi-family residential (30.0, down from 34.2).

At this point, it's really anybody's guess as to when things will turn around.


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