Real Estate Bubble

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Architecture Billings Index



Shows No Significant Improvement in Business Conditions Inquiries for new projects remain favorable, but not translating into work


For immediate release:
Washington, D.C. – June 24, 2009 –

There has been a recent moderation in the downturn in design services billings, but the Architecture Billings Index (ABI) reveals that an economic recovery has stalled. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the May ABI rating was 42.9, nearly identical to the 42.8 mark in April. This score still indicates an overall decline in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry score was 55.2, the third straight month with a score in the mid-50’s.

“The design and construction marketplace is extremely competitive right now,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “Prospective clients are casting a wider net causing numerous firms to bid for the same project, which is why the high level of inquiries is not necessarily translating into additional billings for project work at many firms.”

Key May ABI highlights:

◦Regional averages: Northeast (48.3), Midwest (41.5), South (41.3), West (39.4)
◦Sector index breakdown: multi-family residential (45.5), mixed practice (44.5), commercial / industrial (43.1), institutional (38.0)
◦Project inquiries index: 55.2
About the AIA Architecture Billings Index

The Architecture Billings Index is derived from a monthly “Work-on-the-Boards” survey and produced by the AIA Economics & Market Research Group. Based on a comparison of data compiled since the survey’s inception in 1995 with figures from the Department of Commerce on Construction Put in Place, the findings amount to a leading economic indicator that provides an approximately nine to twelve month glimpse into the future of nonresidential construction activity. The diffusion indexes contained in the full report are derived from a monthly survey sent to a panel of AIA member-owned firms. Participants are asked whether their billings increased, decreased, or stayed the same in the month that just ended. According to the proportion of respondents choosing each option, a score is generated, which represents an index value for each month. The regional and sector data is formulated using a three-month moving average.

About The American Institute of Architects

For over 150 years, members of the American Institute of Architects have worked with each other and their communities to create more valuable, healthy, secure, and sustainable buildings and cityscapes. By using sustainable design practices, materials, and techniques, AIA architects are uniquely poised to provide the leadership and guidance needed to provide solutions to address climate change. AIA architects walk the walk on sustainable design. Visit www.aia.org/walkthewalk.

http://www.aia.org/press/releases/AIAB080266

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