Following housing construction numbers that dropped to their lowest level in over six years, ABI continued along the path of modest growth in October. Growth was sustained by demand for nonresidential projects that should continue to offset the lagging housing market’s effect on the overall economy, according to the American Institute of Architects (AIA).
AIA reported the October ABI rating was 51.1 (any score above 50 indicates an increase in billings), and inquiries for new projects was 62.7. The approximate nine to twelve month lag time between architecture billings and construction spending indicates a healthy outlook for the nonresidential construction market throughout 2007, according to AIA.
“These figures are consistent with continued growth in key nonresidential construction sectors,” says Kermit Baker, chief economist, AIA. “Regional readings were unusually volatile in October. Firms in the Midwest had been reporting weakening conditions in recent months; however, the October score rebounded to its strongest pace of growth since the first quarter of the year. Firms in the South and West reported continued growth, but the pace of growth was down from recent months. Firms in the Northeast reported only their second decline in billings since late 2003.”
Regional averages in the October ABI include the Midwest (51.5), South (51.3), West (52.2), and Northeast (47.1) regions. Sector index breakdowns include, commercial/industrial (55.6), institutional (52.3), mixed (49.4), and residential (42.5)
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 an economic indicator that provides an approximately nine to twelve month glimpse into the future of nonresidential construction activity.
