Wednesday, February 18, 2009

Architecture Billings Index hits a(nother) all-time low

Proving that December's slight increase was nothing more than a fluke, the AIA's Architecture Billings Index dropped to a historic low level in January.

Following consecutive months with record low scores, the December ABI rating was 34.1. (The AIA originally announced that the December 2008 ABI was 36.4, but according to a press release announcing the January numbers, "Every January, the AIA research department uses a formula from the Department of Commerce that re-estimates ABI data based on seasonal factors, resulting in a recalibration of recent figures." That explains the discrepancy.)

However, the American Institute of Architects reported the January ABI rating was 33.3, which marks the lowest rating for the index since its inception in 1995. Any score above 50 indicates an increase in billing. The inquiries for new projects score was 43.5, up from the adjusted figure of 38.5 in December. 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 will likely not see much construction activity in 2009.

"Now that the stimulus bill has passed and includes funding for construction projects, as well as for municipalities to raise bonds, business conditions could improve," said AIA Chief Economist Kermit Baker. "That said, until we can get a clearer sense of credit lines being made available by banks, it will be hard to gauge when a lot of projects that have been put on hold can get back online."

Regionally, the ABI breaks down as follows: West (38.3, up from the adjusted 37.1 figure in December), Midwest (34.6, up from the adjusted 34.3 in December), South (34.4, up from the adjusted 34.0 in December), and Northeast (29.8, down from the adjusted 31.9 in December). Sector by sector, the ABI breaks down thusly: mixed practice (39.6, down from the adjusted 41.5 in December), institutional (37.1, down from the adjusted 38.3 in December), commercial/industrial (33.8, down from the adjusted 30.4 in December), multi-family residential (29.5, which was also the adjusted number for December). According to the AIA, the regional and sectoral averages are three-month moving averages, due to the small sample size.


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