Tuesday, October 19, 2010

Architecture Indexes Back to Pre-Recession Levels; Highest Billings Since Jan. '08, Inquiries July '07

Washington, D.C. – October 20, 2010 – "For the first time since January 2008, the Architecture Billings Index (ABI) indicated a growth in design activity in September, increasing for the fourth straight month. 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 September 2010 (Overall National) ABI score was 50.4, up from a reading of 48.2 the previous month (see chart above). 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 also up sharply, moving from 54.6 to 62.3 – the highest mark since July 2007 (see chart)."

MP:  The Architecture Billings Index and New Projects Inquiry Index are both back to pre-recession levels now, more evidence that a) the economic recovery is real and sustained, and b) chances of a double-dip recession are fading.  The ongoing gains in the ABI in 7 out of the last 8 months (and 10 out of the last 13 months), and the September reading above the benchmark level of 50 signaling expansion, both indicate that we can also expect continued, future improvements in construction activity.   


At 10/20/2010 8:38 AM, Blogger morganovich said...

i don't think you are reading this correctly.

"pre recession levels" here has no real meaning.

over 50 is growth, so the more accurate statement is that for the first time billings stopped going down.

they are still at the absolute low for the cycle.

a ball that has finally reached the floor is not best described as "having bounced back".

At 10/20/2010 8:42 AM, Blogger morganovich said...

another way to look at this would be to say that the billing index needs to average 60 for 18 months to get the actual level of billings back to pre recession levels.

one month at 50.4 is a long way from that.

At 10/20/2010 9:18 AM, Blogger Buddy R Pacifico said...

This is very good news. Architecture billing would of course presage more building activity. Residential construction is finally trending up after a long pause and it looks likely to continue based on the indexes presented her.

At 10/20/2010 9:54 AM, Blogger Unknown said...

"According to the AIA, there is an "approximate nine to twelve month lag time between architecture billings and construction spending" on non-residential construction. So, if the index stays at 50 or above, this suggests there will probably be further declines in CRE investment for the next 9 to 12 months.

Calculated Risk

At 10/21/2010 8:39 AM, Blogger Eric H said...

The increase in number of billings is also not a measure of the profitability of those projects. We are still seeing contractors bidding projects at 0% profit (or less) and architects taking new construction projects on 3-4% fees. I may turn down some of that work because they are guaranteed losers (and liability). There is some more work available, but the profit is less (or non-existent) and the risk is greater.


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