Architecture Billings Index drops again.November 2, 2007 -
Following 6 point decline in August, Architecture Billings Index for September dropped to its lowest level since June 2006 amid fears in credit market. As a leading economic indicator of construction activity, ABI shows approximate 9-12 month lag time between architecture billings and construction spending. AIA reported September ABI rating was 51.1, down from previous mark of 53.9 (any score above 50 indicates increase in billings), and inquiries for new projects was 61.4.
Architecture Billings Index Drops Again Amid Ongoing Fears in Credit Market |
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American Institute of Architects
1735 New York Ave. N.W.
Washington, DC, 20006
USA
Press release date: October 17, 2007
National credit problems causing project delays in nonresidential market Washington, D.C., October 17, 2007 - Following a six point decline in August, the Architecture Billings Index (ABI) for September dropped to its lowest level since June 2006. As a leading economic indicator of construction activity, the ABI shows an approximate nine to twelve month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the September ABI rating was 51.1, down from the previous mark of 53.9 (any score above 50 indicates an increase in billings), and inquiries for new projects was 61.4.
"While there is plenty of nonresidential construction activity in the pipeline over the coming months, the demand for new projects is tapering off a bit." said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. "The fallout from the subprime mortgage meltdown in the residential market has seeped into the nonresidential sector causing project delays and a tightening market for financing. There is also emerging concern in the industry that this situation will extend into 2008."
Key September ABI highlights: o Regional averages: South (53.0), Northeast (52.0), West (52.0), Midwest (49.5) o Sector index breakdown: mixed practice (55.0), commercial / industrial (54.9), institutional (49.0), multi-family residential (44.3) o Billings inquiries index: 61.4
Morgan Stanley machinery analyst, Robert Wertheimer, stated, "Our clients are watching closely for signs of trouble in nonresidential construction. So far, data are consistent with our view of a slowdown, not a meltdown, in nonresidential construction growth. With the core ABI index showing growth, and commercial/industrial showing solid, if declining, growth, we see the environment as still relatively healthy. The falloff this month, though, is reason for continuing attention."
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.
About The American Institute of Architects For almost 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. AIA members have access to the right people, knowledge, and tools to create better design, and through such resources and access, they help clients and communities make their visions real. Contact: Scott Frank 202-626-7467 sfrank@aia.org
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