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AIA Reports Yet Another Setback for the Architecture Billings Index

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The American Institute of Architects reports that June marked the third consecutive decline in revenue at U.S. architecture firms as measured by the Architecture Billings Index (ABI).

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The ABI reflects the approximate nine- to 12-month lag time between architecture billings and construction spending. The AIA reported the June ABI score was 46.3, almost a full point from a reading of 47.2 the previous month. This score reflects a continued decrease in demand for design services (any score above 50 indicates an increase in billings).

However, the AIA says the new projects inquiry index was 58.1, up sharply from a mark of 52.6 in May.

“This seems to be a case of not thinking it can get any worse – and then it does,” said AIA Chief Economist, Kermit Baker. “While a modest turnaround appeared to be on the way earlier in the year, the overall concern about both domestic and global economies is seeping into the design and construction industry and adding yet another element that is preventing recovery. Furthermore, the threat of the federal government failing to resolve the debt ceiling issue is leading to higher borrowing rates for real estate projects and should there actually be a default, we are likely looking at a catastrophic situation for a sector that accounts for more than ten percent of overall GDP.”

Key June ABI highlights: Regional averages: West (51.7), Northeast (47.5), South (47.3), Midwest (44.6); and sector index breakdown: mixed practice (51.5), commercial/industrial (50.0), multi-family residential (49.6), institutional (45.9).

 

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