ABI Reports Strongest Business Conditions Since 2007

ABI November 2012 via Calculated Risk

The numbers are in and the American Institute of Architects’ November Architecture (ABI) has revealed positive business conditions for all building sectors for the fourth consecutive month.

As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lag time between architecture billings and construction spending. Understanding this, the is pleased to report that November has reached a five-year high with a score of 53.2, slightly up from 52.8 in October. Since August, the national billings index has continued to increased above 50.0 – the break-even point between contraction and growth – reflecting a steady rise in demand for design services. The West seems to be the only region in contraction, coming in at a score of 49.6.

Additionally, November also sees the Project Inquiry Index at 59.6, marking the 47th straight month in which inquiries into architectural services has been increasing.

“These are the strongest business conditions we have seen since the end of 2007 before the construction market collapse,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “The real question now is if the federal budget situation gets cleared up which will likely lead to the green lighting of numerous projects currently on hold. If we do end up going off the ‘fiscal cliff’ then we can expect a significant setback for the entire design and construction industry.”

View the ABI highlights in greater detail, after the break…

Update: ABI May

Via the WSJ

We continue our coverage of the Architecture Billings Index with a not-so optimistic report for May.   The economic indicator showed a substantial drop in the Index (which had previously been inching upward over the past five months).    In fact, all regions reported a decline in demand for design services and all regions fell below 50 (any score above 50 indicates an increase in billings).     The official report for May was 45.8, with the regional breakdown as follows: Northeast (48.6), West (47.6), Midwest (46.8), South (46.1).  “For the second year in a row, we’re seeing declines in springtime design activity after a healthy first quarter.  Given the ongoing uncertainly in the economic outlook, particularly the weak job growth numbers in recent months, this should be an alarm bell going off for the design and construction industry,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA.  “The commercial/industrial sector is the only one recording gains in design activity at present, and even this sector has slowed significantly. Construction forecasters will have to reassess what conditions will look like moving forward.”

We will keep you updated and hope for some different news for June.

 


Update: ABI March

In keeping with our coverage of the ABI, the index scored 50.4 for March, marking the fifth consecutive month showing positive conditions.

The billings index is our industry’s leading indicator of construction activity, and for March, the commercial sector is continuing its positive run with a score of 56.0.  Although scores above 50 reflect a positive showing, the new projects inquiry dropped to 56.6 from a high 63.4 reported in February.    “We are starting to hear more about improving conditions in the marketplace, with a greater sense of optimism that there will be greater demand for design services,” said Chief Economist, Kermit Baker, PhD, Hon. .  “But that is not across the board and there are still a number of architecture firms struggling so progress is likely to be measured in inches rather than miles for the next few months.”    Regionally, the Midwest leads with 54.1, following by the Northeast, South and West with scores of 53.9, 50.1 and 46.6, respectively.

While the five month run seems to show promising conditions, the index is barely above the cutoff score of 50 and conditions have remained volatile throughout this post recession period.    And, although we enjoying sharing the statistics, we understand the numbers don’t tell the whole story, so we would like to hear how your firms are fairing.  Have your projects included an increase in commercial programs recently?  Let us know in the comments below.


Update: ABI January

via

The (ABI) has clocked in at a positive 50.9 for January.  Although the score brings the ABI into positive territories for the past three months, 50.9 is slightly over the positive measuring marker and actually, just under December’s mark of 51.0.   Regional averages place the Midwest as the leading area with 53.7; followed by the South (51.6),  Northeast (50.7), and West (45.6).  AIA Chief Economist, Kermit Baker, PhD, Hon. AIA explained that even though the index is showing a similar upturn in design billings to the late 2010 and early 2011, firms are still having a hard time staying on their feet.  “We still continue to hear about struggling firms and some continued uncertainly in the market, we expect that overall economic improvements in the design and construction sector to be modest in the coming months.”

We want to know if you are seeing positive effects of an increased ABI over the past three months.  Are your offices acquiring more projects? Hiring new people? Or, has the situation remained similar over the past months?

Update: ABI December


December via CalculatedRisk

We are happy to report another positive showing for the ABI this month as the index remained at 52.0 for the month of December.  Prior to November, the volatile ABI showed the struggling and unstable conditions many practices were experiencing throughout 2011; yet, this month brings another bit of hope for the profession.  “We saw nearly identical conditions in November and December of 2010 only to see momentum sputter and billings fall into negative territory as we moved through 2011, so it’s too early to be sure that we are in a full recovery mode,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “Nevertheless, this is very good news for the design and construction industry and it’s entirely possible conditions will slowly continue to improve as the year progresses.”   Regional breakdowns are as follows: Regional averages: South (54.2),  Midwest (53.1), Northeast (52.6), West (45.1) and Multim-family residential led the sector index breakdown with 54.3.  It was nice to finish the rocky year of 2011 with a consecutive positive index, and we’re optimistic for more improvement in 2012.

Update: ABI / November


Finally! Amidst all the holiday cheer, we are happy to report a positive Architecture Billings Index this month. From August through October, the has had a crazy run with large dips in the index, but November has changed that with a score a 52.0. Up from 49.4 in October, the 52.0 teamed with a new projects inquiry index of 65.0 rounds out a strong November.  Interesting to note, the South led the regional averages with 54.4 followed by the Midwest (50.9) and then the Northeast (49.1) and the West (45.6).  And, the sector breakdown measured multi-family residential at 55.8 while industrial/commercial tallied 53.9/ “This is a heartening development for the design and construction industry that only a few years ago accounted for nearly ten percent of overall GDP but has fallen to slightly less than six percent,” said Chief Economist, Kermit Baker, PhD, Hon. . “Hopefully, this uptick in billings is a sign that a recovery phase is in the works.  However, given the volatility that we’ve seen nationally and internationally recently, we’ll need to see several more months of positive readings before we’ll have much confidence that the U.S. construction recession is ending.”

Update: ABI October

October via Calculated Risk

It seems that the has bounced back a bit from its sharp drop in September.  A month ago, the ABI measured 46.9 – a score nearly 5 points lower than August – yet, this month, the AIA has reported the October ABI at 49.4   While the score shows a positive leap forward since September, any billings index below 50 still reflects a negative showing.   However, the new projects inquiry index seems to be this month’s silver lining as it jumped to 57.3 for October.

Check out the regional breakdown after the break.

Update: ABI September

ABI September via Calculated Risk

The  just reported September’s Architecture Billings Index measuring 46.9, a sharp drop since August’s 51.4.  Such a low index reflects a decrease in demand for design services, and the new projects inquiry index was 54.3, down from a reading of 56.9 the previous month.  “It appears that the positive conditions seen last month were more of an aberration,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “The economy is weak enough at present that design activity is bouncing around more than usual; one strong month can be followed by a weak one. The economy needs to be stronger to generate sustained growth in design activity.”  Regional averages place the Midwest first with as score of 51.0, with the Northeast following at 50.8, South at 47.3 and West at 46.7.  As we’ve been seeing, the commercial/industrial sector is leading with 52.4.

 

Update: New Database for Stalled Projects + ABI June

June Chart via CalculatedRiskBlog

The architectural profession has been greatly influenced by the recession that began over three years ago.    With hundreds of projects, on a variety of scales, being stalled or completely canceled, and firms forced to lay off extreme numbers of employees, many estimate that our profession has taken one of the hardest hits of this economic downturn.

We are constantly, and optimistically, seeking that metaphorical silver lining to get back on our feet hoping our industry will revive itself.  Yet, back in March of this year,  the Chief economist for the AIA, Kermit Baker, warned, “We’ve been preaching patience and cautious optimism for a full recovery because there continues to be a wide range of business conditions for architecture firms that are also influenced by firm size, practice specialties and regional location. We still expect the road to recovery to move at a slow, but steady pace.”

More after the break.

Update: ABI November

National Architectural Growth via Kermit Baker for the

As we shared in September, the Architecture Billings Index () reported an ever so slight increase with the index shifting from 47.9 to 48.2 in August.  Now, the index shows a 52.0 – a 3 point increase from last month. This is great news for our profession as this billings marks the strongest point we’ve reached since December of 2007.   As the New Year approaches, we’re hoping that this trend can steadily climb higher and bring prosperity for 2011; especially since firms across the country – from the Northeast to the West – reported increases. However, the New Year will bring mixed feelings to firms as Kermit Baker, Hon. AIA, AIA Chief Economist stated in his report of the ABI. “Both residential and commercial/industrial firms are more optimistic about business conditions over the coming year. Half of the firms in each group are expecting revenue increases in 2011…In contrast, almost half of institutional firms are expecting revenue declines over the coming year, with only 38 percent expecting growth,” stated Baker.

More information about the recent ABI after the break.

Latest ABI News

THE AIA BILLINGS INDEX FOR THE LAST 12 MONTHS, SHOWING BILLINGS (BLUE) AND INQUIRIES (RED).
Billings Index for the last 12 Months via Architect's Newspaper. BILLINGS (BLUE) AND INQUIRIES (RED).

Over the past few months, we’ve been keeping you up to date on the latest reportings of the Architecture Billings Index as our profession, among others, seems to be stuck in a frustrating cycle of huge drops and struggling gains.  As Jeff Byles reported for the Architect’s Newspaper, the Billings Index slowly climbed upward from 47.9 in July to 48.2 in August.   Although this does mark some progress, we still are not where we would all like to be as a profession.   Yet, could this finally be the end of the decline?  Are we on the path toward recovery?  We are certainly optimistic, even if the Billings continue to slowly inch upward.  Kermit Baker, the chief economist for the told the AN,  “I expect it to continue to move up, but move up fairly slowly in the months ahead…We’ve had a pretty strong year of business investment on the software and equipment side, and that usually leads to a recovery on the building side.  We’re in the early stages of that.”

More about the Billings Index after the break.