Architecture Billings Index remains positive despite drop.
Press Release Summary:
Providing economic indicator of construction activity, Architecture Billings Index dropped from 57.9 in January to 52.2 in February. With approximate 9-12 month lag time between architecture billings and construction spending, news should not weaken forecast that remains favorable for nonresidential construction market throughout 2007. Diffusion indexes contained in full ABI report are derived from monthly survey sent to panel of AIA member-owned firms.
Original Press Release:
Architecture Billings Index Remains Positive Despite Dropping Five Points
Inquiries remain strong for new projects, but all regions report slowing conditions
Washington, D.C., March 21, 2007 - After three consecutive months of unexpectedly high scores, the Architecture Billings Index (ABI), a leading economic indicator of construction activity, dropped more than five points in February. The American Institute of Architects (AIA) reported the February ABI rating was 52.5 (any score above 50 indicates an increase in billings), compared to a score of 57.9 in January. With an approximate nine to twelve month lag time between architecture billings and construction spending, this news should not weaken a forecast that remains favorable for the nonresidential construction market throughout 2007.
"It's not surprising that the demand for architectural services has eased somewhat given the unusually high level of activity over the last three months," said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. "This is likely a reflection of a design and construction market stabilizing due to a return to seasonably cold weather."
Key February ABI highlights:
o Regional averages: Northeast (65.7), South (57.3), West (51.0), Midwest (50.8)
o Sector index breakdown: mixed practice (59.9), residential (55.6), institutional (53.5), commercial / industrial (51.8)
o Inquiries index: 61.9
Matthew A. Litfin, CFA, principal equity research analyst at William Blair & Company added, "The latest Index dovetail with other macroeconomic trends observable in the United States currently. Solid expansion in architectural billings in February, at a cooler yet perhaps more sustainable growth rate, mirrors recently reported statistics in employment and gross domestic product. This ABI number appears to corroborate a view that non-residential construction growth will expand demonstrably in 2007 and beyond."
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 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. www.aia.org
Contact: Scott Frank
202-626-7467
sfrank@aia.org
