On the heels of a more than two point gain in February, the Architecture Billings Index (ABI) was up again in March. 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 March ABI rating was 46.1, up from a reading of 44.8 the previous month. Though this score reflects a continued decline in demand for design services (any score above 50 indicates an increase in billings), it is the highest score since August 2008. The new projects inquiry index was 58.5.
“This is certainly an encouraging sign that we could be moving closer to a recovery phase, even though we continue to hear about mixed conditions across the country,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “Firms are still reporting an unusual amount of variation in the level of demand for design services, from improving to poor to virtually non-existent. This increasing volatility is often a sign that overall business conditions may begin to change in the coming months.”
Key March ABI highlights:
◦Regional averages: Midwest (50.5), Northeast (47.0), West (46.0), South (44.4)
◦Sector index breakdown: multi-family residential (47.3), institutional (46.8), mixed practice (45.0), commercial / industrial (44.7)
◦Project inquiries index: 58.5
About the AIA Architecture Billings Index
The Architecture Billings Index is derived from a monthly “Work-on-the-Boards” survey and produced by the AIA Economics & Market Research Group. Based on a comparison of data compiled since the survey’s inception in 1995 with figures from the Department of Commerce on Construction Put in Place, the findings amount to a leading economic indicator that provides an approximately nine to twelve month glimpse into the future of nonresidential construction activity. The diffusion indexes contained in the full report are derived from a monthly survey sent to a panel of AIA member-owned firms. Participants are asked whether their billings increased, decreased, or stayed the same in the month that just ended. According to the proportion of respondents choosing each option, a score is generated, which represents an index value for each month. The regional and sector data is formulated using a three-month moving average.