Building Index Forecasts Construction Surge

After hovering around the no growth mark for the past three months, the Architecture Billings Index (ABI) jumped in August to its highest mark since July 2005, according to the American Institute of Architects.

The Architecture Billings Index provides a look six months into the future of nonresidential construction activity and is derived from a monthly “Work-on-the-Boards” survey and produced by the AIA Economics & Market Research Group.

Based on the approximate six to nine month lag time between architecture billings and construction spending, the latest figures are very encouraging for the overall economy because they suggest a strong outlook in the commercial construction market well into 2007, AIA says.

The AIA reported the August ABI rating was 59.5 (any score above 50 indicates an increase in billings), a substantial rise from the 51.8 mark in July.

Demand for commercial / industrial projects continues to lead the way for increased billings, along with architecture firms on the East and West coast reporting a significant upturn in business.

“The August numbers showed a sharp rebound from the unusually slow conditions of the past three months. It appears that this nonresidential construction spending cycle has sustained momentum,” says AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “Despite higher short-term interest rates and increasing costs of building materials, the nonresidential construction sector continues to help fuel the economy during a time when the housing market is suffering.”

Key August ABI highlights:

• Regional averages: West (61.2), Northeast (57.3), South (56.7), Midwest (49.1) • Sector index breakdown: commercial / industrial (61.4), institutional (55.7), mixed (53.9), residential (48.0)

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