AIA Billings Index Hits New Low

Washington, DC, April 23, 2008--The AIA Billings Index, a future indicator of U.S. nonresidential construction activity, fell to a record low in March, reflecting the impact of the credit crunch on the broader economy, AIA said.

The index fell two points to 39.7 last month, the lowest since the survey began in 1995, the American Institute of Architects said.

The March decline follows a nine-point plunge the previous month, and suggests weaker nonresidential construction activity about nine to 12 months in the future. A reading below 50 indicates contraction.

"Activity at architecture firms is coming to a screeching halt," said the group's chief economist, Kermit Baker. The credit crunch has "sloshed over" into a broader downturn in the economy, he added.

"Why put up new retail space if consumer spending is declining? Independent of whether or not you get financing for these projects, some of them just don't make sense in this environment."

All U.S. regions showed weakness in March, with the South slightly less hard-hit than other parts of the country..

However, Baker said the downturn is likely to be less severe than the one in 2001 and 2002 because this time the construction upswing created less excess inventory.

He noted that developers and property owners that have projects in the design queue are saying they want to hold off on these projects until the economy recovers.

Nonresidential building has held up over the past two years, even as the U.S. housing market has slumped. But some companies that sell into the nonresidential construction market have started to forecast a downturn.

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