The Architecture Billing Index (A Leading Indicator) Improves in Aug. and In 6 Out of the Last 7 Months
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."
6 Comments:
Many architecture firms in my area are down to skeleton crews (layoffs) and working less than 40 hours per week. Any sizable work that is available is being taken too cheap to be profitable, but it may keep the doors open. This is indicated in the other chart titled "Firm Billings Continue to Decline in All Regions" A lot of those billings carrying firms through could be "shovel ready" stimulus funded jobs too. We had only two projects last year (out of 60 or so) that were new construction. Everything was renovation or small additions. We don't do federal work, so not much interaction on the stimulus funded projects except when filtered through the state or local gov't (ex. schools, firehalls, etc.).
i'm not sure "improves" is really the correct word here.
sure, the index is up, but billings are still in decline.
perhaps "got worse less quickly" is a better description?
we're interested in the billings, not the index.
WASHINGTON (MarketWatch) — U.S. house prices fell 0.5% in July to the lowest level in nearly six years, according to data released Wednesday by the Federal Housing Finance Agency.
The 0.5% seasonally adjusted drop in monthly prices came after a 1.2% drop in June; the FHFA initially reported that June prices slipped 0.3%.
Over 12 months, prices are down 3.3%. The FHFA said that the July index is roughly the same value as was seen in September 2004.
Is there a way to break out the Government funded project vs. private Dollars?
Wow. The blog calculated risk takes the same data and reaches a VERY opposite conclusion.
http://www.calculatedriskblog.com/2010/09/aia-architecture-billings-index-shows.html
This does not show any improvement. It shows slower deterioration. Anything below 50 is continued contraction.
The ABI isn't improving until it rises above 50. And even then it must remain well above 50 for an extended period to offset all of the area above the graph but below 50 during the downturn.
Architecture and Engineering employment are still declining at a rapid rate.
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