Previously, the index had been positive for nineteen consecutive months and twenty-eight out of the last twenty-nine months. The American Institute of Architects (AIA) reported the May ABI rating was 49.6 (any score below 50 indicates a drop in billings), down sharply from the 54.2 mark in April.
“After such a prolonged period of positive business conditions at architecture firms, it is inevitable that the market would soften a bit,” says AIA Chief Economist Kermit Baker. “Because inquires for new projects continue to be strong this isn’t alarming news. If this pattern continues over the next few months, then there will be greater concerns for the nonresidential construction outlook. But at this point, there are so many construction projects in the pipeline that the industry shouldn’t feel a slowdown yet.”
Key May ABI highlights:
• Regional averages: South (54.4), Midwest (51.4), West (50.5), Northeast (50.5)
With remarks on how the nonresidential construction market will impact related industries, UBS Investment Bank furniture analyst Susan Maklari said, “We continue to forecast growth in commercial furniture shipments through 2006, despite this month’s slowdown in the ABI. We note that this decline is off of difficult comparisons and that total private nonresidential construction remains positive on a year-over-year basis.”
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 six 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.
