Architecture Billings Index Moves Into Negative Territory

The Architecture Billings Index (ABI) dipped slightly into negative territory in January, after a strong showing in December. As an economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the January ABI score was 49.5, down from a score of 55.6 in the previous month. This score reflects a minor decrease in design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 60, up from a reading of 57.6 the previous month.

“This decrease in activity, taking into consideration strong readings in project inquiries and new design contracts, isn’t exactly a cause for concern,” says AIA Chief Economist, Kermit Baker, Hon. AIA, PhD. “The fundamentals of a sound nonresidential design and construction market persist.”

Key January ABI highlights:

  • Regional averages: South (54.2), Northeast (53), Midwest (52.4), West (48.8)
  • Sector index breakdown: institutional (54.6), commercial / industrial (53.4), mixed practice (48.1), multi-family residential (48.1)
  • Project inquiries index: 60
  • Design contracts index: 52.1

ABI Posts Decline in Demand for Design Services

The Architecture Billings Index (ABI) posted consecutive months of a decline in demand for design services.  As an economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the September ABI score was 48.4, down from the mark of 49.7 in the previous month. This score reflects a decrease in design services (any score above 50 indicates an increase in billings).  The new projects inquiry index was 59.4, down from a reading of 61.8 the previous month.

“This recent backslide should act as a warning signal,” states AIA Chief Economist, Kermit Baker, Hon. AIA, PhD.  “But this drop-off in demand could be continued hesitancy in the marketplace to move forward on projects until the presidential election is decided. The fact that new work coming into architecture continues to slowly increase suggests that billings will resume their growth in the coming months.”

Key September ABI highlights

  • Regional averages: South (53.4), Midwest (50.1), West (49.5), Northeast (44)
  • Sector index breakdown: commercial/industrial (50.4), mixed practice (49.8), institutional (49), multi-family residential (48.8)
  • Project inquiries index: 59.4
  • Design contracts index: 51.4

The regional and sector categories are calculated as a 3-month moving average, whereas the national index, design contracts and inquiries are monthly numbers.

Architecture Billings Index Falls Below Positive Mark

On the heels of six out of seven months of increasing levels of demand for design services, the Architecture Billings Index (ABI) fell just below the positive mark. As an economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the August ABI score was 49.7, down from the mark of 51.5 in the previous month. This score reflects a decrease in design services (any score above 50 indicates an increase in billings).  The new projects inquiry index was 61.8, up from a reading of 57.5 the previous month.

“This is only the second month this year where demand for architectural services has declined and it is only by a fraction of a point,” said AIA Chief Economist, Kermit Baker, Hon. AIA, PhD.  “Given the solid numbers for new design contracts and project inquiries, it doesn’t appear that this is the beginning of a broader downturn in the design and construction industry.”

Key August ABI highlights:

  • Regional averages: South (55.2), Midwest (52.8), West (49.0), Northeast (44.9)
  • Sector index breakdown: mixed practice (51.8), multi-family residential (50.9), commercial / industrial (50.8), institutional (50.7)
  • Project inquiries index: 61.8
  • Design contracts index: 52.7

Business Conditions Show Decrease in Architecture Billings and Construction Spending

As has been the case a few times already this year, the Architecture Billings Index (ABI) dipped in November. As an economic indicator of construction activity, the ABI reflects the approximate 9- to 12-month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the November ABI score was 49.3, down from the mark of 53.1 in the previous month. This score reflects a decrease in design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 58.6, up just a nudge from a reading of 58.5 the previous month.

“Since architecture firms continue to report that they are bringing in new projects, this volatility in billings doesn’t seem to reflect any underlying weakness in the construction sector,” says AIA Chief Economist Kermit Baker, Hon. AIA, PhD. “Rather, it could reflect the uncertainty of moving ahead with projects given the continued tightness in construction financing and the growing labor shortage problem gripping the entire design and construction industries.”

Key November ABI highlights:

  • Regional averages: South (55.4), West (54.5), Midwest (47.8), Northeast (46.2)
  • Sector index breakdown: multi-family residential (53.8), institutional (52.0), commercial / industrial (51.0), mixed practice (47.6)
  • Project inquiries index: 58.6
  • Design contracts index: 53.5

The regional and sector categories are calculated as a 3-month moving average, whereas the national index, design contracts and inquiries are monthly numbers.