Wednesday, November 16, 2011

AIA ABI Index for October 2011 increases, but still below 50

AIA ABI Index, recent “readings”:

49.4 – October 2011

46.9 – September 2011

51.4 – August 2011

45.1 – July 2011

46.3 – June 2011

47.2 – May 2011

47.6 – April 2011

50.5 – March 2011

50.6 – February 2011

50.0 – January 2011

54.2 – December 2010

52.0 – November 2010

48.7 – October 2010

50.4 – September 2010

Prior to September 2010, the ABI Index had not been at 50 or above since December 2007.

After a sharp dip in September 2011, the Architecture Billings Index (ABI) climbed nearly three points in October 2011. I’m not sure that Reprographers should rejoice over this development – the increase in the ABI from September to October – because the October index, at 49.4, is still below 50.

The American Institute of Architects (AIA) reported the October ABI score was 49.4, following a score of 46.9 in September. This score reflects an overall decrease in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 57.3, up from a reading of 54.3 the previous month.

“An increase in the billings index is always an encouraging sign,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “We’re seeing some regions and some construction sectors move into positive territory. But there continues to be a high level of volatility in the marketplace with architecture firms reporting a wide range of conditions from improving to uncertain to poor. It’s likely we will see a similar state of affairs in the coming months.”

· Key October ABI highlights:

· Regional averages: Northeast (51.7), South (49.1), Midwest (47.7), West (43.5)

· Sector index breakdown: commercial / industrial (53.5), multi-family residential (51.3), institutional (47.3), mixed practice (42.0)

· Project inquiries index: 57.3

The ABI index increased to 49.4 in October from 46.9 in September. However, in spite of the increase from September to October, anything below 50 indicates contraction in demand for architects' services.

The ABI is considered a leading economic indicator of construction activity. 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 the recent surveys suggest further declines in CRE (commercial real estate) investment in 2012.

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