AIA's Construction Index Drops Again; Construction in West Plunges
In a sign of continuing weakness in the construction market, the Architecture Billings Index from the American Institute of Architects (AIA) dropped two points in May to 43.4.
In a sign of continuing weakness in the construction market, the Architecture Billings Index from the American Institute of Architects (AIA) dropped two points in May to 43.4.
As an economic indicator of construction activity, the ABI shows an approximate nine to twelve month lag time between architecture billings and construction spending. The drop in May marks the fourth decline in the index since January.
Any score above 50 indicates an increase in billings for architects. The inquiries for new projects score was 46.5.
“With the exception of the institutional sector – projects like government buildings, schools and hospitals – we’ve seen a dramatic contraction in design activity in recent months,” says AIA Chief Economist Kermit Baker. “Right now things are especially hard in the West and in the commercial and multifamily residential sectors. This weakness in design activity can be expected to produce a contraction in these construction sectors later this year and into 2009.”
Key May ABI Highlights:
Regional averages: Midwest (51.9), South (47.0), Northeast (41.7), West (36.3)
Sector index breakdown: institutional (53.9), mixed practice (45.3) commercial / industrial (39.7) multi-family residential (36.8)
Project inquiries index: 46.5
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 an 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.
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