Friday, December 18, 2009

ABI Ends Up and Down Year on a Down Note

The American Institute of Architects' Architecture Billings Index (ABI) dropped more than three points in November, proving itself unable to sustain the positive momentum it generated the previous month, when it reached its highest mark since August 2008.

The November rating of 42.8 fell from its October rating of 46.1 and was the lowest rating since 41.7 in August (September's rating was 43.1). That August 2008 watermark came just before the fall 2008 credit crunch affected not only the AEC industry, but the entire economy.

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

The 42.8 mark indicates a continued decline in the demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry score was 58.5, the same mark as in October.

"There continues to be a lot of uncertainty in the construction industry that likely will delay new projects in the near future," said AIA Chief Economist Kermit Baker. "Perhaps the President's plan calling for loans for small business, funding for instructure projects, and rebates for homeowners making energy-efficient improvements will help speed a recovery in the construction industry."

Anything that would bring a measure of stability to the AEC industry, let alone growth, would be a welcome sign these days. The index was 42.9 in May, dipped to 37.7 in June, increased to 43.1 in July, dipped to 41.7 in August, climbed to 43.1 in September and 46.1 in October, and fell to 42.8 in November.

Numbers that constantly move up and down make it difficult for architecture firms to make strategic decisions with any certainty that their fortunes are turning for the better.

Regional averages were as follows: South (46.4, up from 46.1 in October, 42.7 in September, 44.1 in August, 43.4 in July, and 40.5 in June), Northeast (45.0, up from 44.3 in October, but down from 47.4 in September and 45.2 in August and up from 37.8 in July and 42.8 in June), Midwest (43.7, up from the 43.0 mark where it stayed the previous three months), and West (41.1, down from 42.8 in October, but still up from 36.0 in September, 37.5 in August, 39.7 in July, 39.9 in June, 39.4 in May, and 39.2 in April).

The November ABI breaks down by sector as follows: institutional (47.0, down from 48.7 in October, but up from 43.9 in September and 37.5 in August), multi-family residential (45.8, showing the continued uptick from 45.4 in October, 45.1 in September, 43.4 in August, 40.7 in July, and 42.7 in June), mixed practice (42.8, the highest it has been since July and up from 39.1 in October, 36.3 in September, 41.4 in August, but down from 42.9 in July, 43.5 in June, 44.5 in May, 44.2 in April, and 44.0 in March), and commercial/industrial (40.7, down from 41.7 in October, but up from 39.0 in September, and down from 45.6 in August and 42.9 in July).


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