The Architecture Billing Index (A Leading Indicator) Improves in Aug. and In 6 Out of the Last 7 Months
The American Institute of Architects (AIA) just released its monthly Architecture Billings Index (ABI) for August, which improved to 48.2 last month compared to 47.9 in July, and
was the sixth monthly increase during the last seven months of the leading economic indicator for construction activity. Except for a slightly higher reading of 48.4 in April of this year, the August reading of the ABI was the highest index level since January 2008 (see chart above).
Although the ABI has still not risen above the benchmark level of 50 which signals overall expansion of billings, the leading indicator has been on an upward trend since early 2009 when the ABI hit a recession-low of 33.9, and has now risen by 14.3 points. This upward trend is evidence of a gradual and steady improvement in billings, and a signal of future improvements in construction activity.
Among the various components of the ABI that are above 50 and signal expansion include the Northeast average for billings (50.9), billings for commercial and industrial (50.6), and the Project Inquires Index (54.6).
According to the AIA:
"Still not entering into the positive phase, the Architecture Billings Index (ABI) increased for the third straight month in August. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the August ABI score was 48.2, up slightly from a reading of 47.9 the previous month. This score reflects a continued decline in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry index was also up, moving from 53.1 to 54.6."