Tuesday, January 18, 2011

Architecture Billings Index Continues Positive Momentum, Reaches Pre-Recession Level in Dec.

Washington, D.C. – January 19, 2011 – "On the heels of its highest mark since 2007, the Architecture Billings Index (ABI) jumped more than two points in December. 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 December ABI score was 54.2, up from a reading of 52.0 the previous month. This score reflects an increase in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 62.6, up slightly from a mark of 61.4 in November."

“This is more promising news that the design and construction industry is continuing to move toward a recovery,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. However, historically December is the most unpredictable month from a business standpoint, and therefore the most difficult month from which to interpret a trend. The coming quarter will give us a much better sense of the strength of the apparent upturn in design activity.”

MP: The New Project Inquiries Index is at the highest level since July 2007 and the Billings Index is the highest level since November 2007, so both indexes are now above their pre-recession levels. 

14 Comments:

At 1/19/2011 12:18 AM, Blogger Benjamin said...

Oh, die recession, die, die, die.

I happen to work with green architects. Anecdotal evidence backs this up--architects are getting calls.

The Fat Lady is singing on this recession, bubelah. She has her voice tonic on stage, the band is getting warmed up, her opening few songs were tender and upbeat,

Soon as the night gets on, things will be getting hot, and the Fat Lady will start hopping up and down, getting sweaty, her huge boobs bouncing up and down, and belting it out from down deep.

This is going to be a good, long set, there are a lot of songs to go, and then a second act. This thing is going to be a house on fire--capital is on the sidelines in huge piles, and will pour in when it looks safe.

The Fat Lady is singing--get your tickets, or go out to the Loser's Lounge out by the street entrance.

I see 13k on the Dow before the World Series Classic.

 
At 1/19/2011 7:43 AM, Blogger Joel said...

Mark, the Press Release your post cites is dated January 2010, not January 2011.

 
At 1/19/2011 9:27 AM, Blogger Michael Hoff said...

Yay. More nondescript rectangular buildings.

 
At 1/19/2011 9:37 AM, Blogger Eric said...

Their January 2011 release is due out today. From AIA's last press release (December 2010) on their ABI:

"Given the uncertainty in the economy and the slow recovery in design activity, architecture firms are reasonably pessimistic about the outlook for 2011. Overall revenue growth is projected to average in the 2 to 3 percent range, but almost one in three firms expect revenue for 2011 to be below 2010 levels. Over half of these firms expect the falloff to be 10 percent or more."

Our business revenue(consulting engineering) in 2010, for the first time ever, had less than 50% coming from architects. We, like they, have reduced staff very significantly (50%). Revenues are way down - so, granted it is somewhat of an anomaly year to compare the revenue source percentages with. But the fact is, billings don't mean anything if the projects are taken at or below cost. They are not a measure of profit - just future activity. And that 2-3% growth is only about 8% behind inflation...so you do the math.

 
At 1/19/2011 10:28 AM, Blogger morganovich said...

meanwhile, housing starts were down 4.3% to the worst level in over a year.

 
At 1/19/2011 11:04 AM, Blogger morganovich said...

before claiming that there is a housing recovery going on, it would behoove one to look at this chart:

http://cr4re.com/charts/charts.html?Housing#category=Housing&chart=HousingStartsLongDec2010.jpg

that's pretty dire.

 
At 1/19/2011 12:24 PM, Blogger Mark J. Perry said...

Joel: Thanks for noticing the typo, it should be 2011, not 2010. Mark

 
At 1/19/2011 1:39 PM, Blogger Benjamin said...

Morgan-

The weak construction market is why the Fed should keep being stimulative. There is slack everywhere.

BTW, hard to see any inflation on the horizon, thanks to USA's open borders.

Strong demand here just leads to strong growth. Why?

Think about it. Strong demand for labor means several million hard-working Latins cross our southern border. We set up call centers in India.

Strong demand for goods mean they pour through the huge LA-LB ports.

Business expansion capital is abundant. Capital can pour in overnight from anywhere.

We can source services globally--architects, engineers, etc.

In the modern-day USA, strong demand just means we make lots of money.

Bernanke, please crank up the presses and let it rip!

 
At 1/19/2011 4:50 PM, Blogger Eric said...

But Morganovich, there's virtually no chance of a double dip....as long as you never leave the first one.

I wish QT would ring in on these AIA billing posts. I am sure some of the architectural work is o.k. - wherever they are still spending someone else's money on "green" and "shovel ready" projects. Since the recession "ended in 2009", should Uncle Ben still have to pump in the POMO Billions on an almost daily basis?

 
At 1/19/2011 7:16 PM, Blogger morganovich said...

as ever benji, you cannot tell inflation from growth.

the last thing we need in an overcapacity situation is loose money. what, you think we need more houses right now? can you possibly be serious?

it was that type of bubble baby thinking that got us into this mess. it cannot get us out even if QE2 worked as planned instead of backfiring in bernakes face (as it has).

 
At 1/19/2011 7:54 PM, Blogger Benjamin said...

Morgan-

You have been Mr. Gloomypants for a while--I think the Dow has about doubled on your doomwatch. The GDP turned around, started growing.

Of course, not everything is perfect. That is life.

But inflation is dead. Will stay dead. And we have a long, secular bull market in front of us.

 
At 1/20/2011 11:33 AM, Blogger Paul said...

"But inflation is dead. Will stay dead. And we have a long, secular bull market in front of us."

Everyone remember this quote from Benji. It will rank up there with his rumored remark from back in 2007: "hey, this Obama guy is dreamy, and so full of hopeanchange."

 
At 1/20/2011 11:46 AM, Blogger morganovich said...

benji-

you do not need a good economy to drive asset prices, just massive over liquidity. a stock market bet is very different from a bet on the economy for precisely that reason.

you still cannot tell monetary expansion from growth and appear to have no idea what you are talking about.

inflation is anything but dead. it's actually quite high. changing the markings on a speedometer to make 60 read 5 doesn't mean you have slowed down.

then you go on to propose we need more construction when we already have a housing glut. are you nuts? would you build more auto plants if they were already running at 60% capacity?

and gloomy? are you kidding? i'm having the best years of my career. i LOVE this market. you just cannot incorporate any reality at all into your bubble baby "die recession die" thinking as you cheerlead for ludicrous monetary policy and fascist notions of the government being responsible for propping up demand.

 
At 1/20/2011 12:26 PM, Blogger morganovich said...

also:

isn't it a bit disingenuous to talk about a dow doubling when it's still 17% below 2007 and essentially flat over the last decade?

 

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