This is the longest stretch that the index has been positive since April 1998 through December 2000. The American Institute of Architects (AIA) reported the February ABI rating was 55.5, the same score that was registered in January. Any score above 50 indicates an increase.
“The fact that we are seeing consistently strong numbers at architecture firms over such a prolonged period without any dips is especially encouraging for the nonresidential construction outlook,” says AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “These figures are following along a similar path as the conditions that led to a very healthy construction sector in the late 1990’s.”
This positive news for the nonresidential construction industry comes on the heels of the index of U.S. homebuilder sentiment falling to its lowest level in three years in March, with rising interest rates and weakening demand for new homes cited as the reasons for the drop. Nonresidential construction can offset some of the emerging weakness in the residential market as existing home sales fell for the fifth straight month in January and the reported slowdown of housing starts in February. Some of the highlights from the February report:
CIBC World Markets senior industrial multi-industry analyst, Robert P. McCarthy, CFA, said, “In tracking the nonresidential construction market for investment potential in electrical equipment manufacturers, a sound leading indicator like ABI is particularly useful, given that much of the electrical content goes into projects at a very late stage of construction. Lighting fixtures, as one of the last installations in a project, gains significant visibility as a construction recovery takes hold.”
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.
