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Architecture Billings Index Begins 2007 on a High Note



The American Institute of Architects (AIA) reports a strong level of inquiries for new projects and positive conditions in all regions and market sectors.


The American Institute of Architects (AIA) reports a strong level of inquiries for new projects and positive conditions in all regions and market sectors.

The AIA’s index is derived from a monthly “Work-on-the-Boards” survey and produced by the AIA Economics & Market Research Group.
 
AIA reported the January Architecture Billing Index (ABI) rating was 57.9, compared to a score of 57.6 in December. Any score above 50 indicates an increase in billings.

Following the Census Bureau report indicating that January housing starts fell to their lowest level since 1997, the ABI indicator of construction activity showed positive conditions across all geographic regions and market sectors in January.

With an approximate nine to twelve month lag time between architecture billings and construction spending, the forecast remains favorable for the nonresidential construction market throughout 2007.

“You have to go back twenty-six months for the last negative score for the index,” says Kermit Baker, AIA chief economist. “While the index was positive in 2006, it hovered around the break even mark for much of the year. So far the last three months have seen much higher levels of demand for design services and is likely to translate into sustained levels of high activity in the construction industry.”

Key January ABI highlights include:
• Regional averages: Northeast (76.0), South (55.6), Midwest (54.4), West (53.0)
• Sector index breakdown: mixed (59.6), institutional (58.8), commercial / industrial (57.2) residential (52.1)
• Inquiries index: 66.8

“Continuing the momentum established in the fourth quarter of 2006, January's ABI clearly supports the outlook for healthy growth in nonresidential construction markets in 2007,” says Peter Lisnic, vice president, Robert W. Baird & Co. “The strength of the ABI readings could even portend market growth above current consensus expectations, which may bolster investor appetite for stocks with nonresidential exposure. One question from January's readings might be whether demand in the residential sector has indeed reached an inflection point.”




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  posted on 3/5/2007   Article Use Policy

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