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ABI Reports Strongest Business Conditions Since 2007

ABI November 2012 via Calculated Risk
ABI November 2012 via Calculated Risk

The numbers are in and the American Institute of Architects’ November Architecture Billings Index (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 AIA 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 January

The Architecture Billings Index (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.”

Update: ABI December

ABI December via CalculatedRisk
ABI 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

National Architectural Growth via Kermit Baker for the AIA
National Architectural Growth via Kermit Baker for the AIA

As we shared in September, the Architecture Billings Index (ABI) 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.