Architectural Billings Index Still Seeking Bottom

Washington, DC, July 22, 2009--A leading indicator of U.S. nonresidential construction spending fell in June after rising in May, suggesting that the commercial downturn has yet to hit bottom.

The Architecture Billings Index fell more than five points last month to a reading of 37.7, after a slight increase in the prior month, according to the American Institute of Architects.

The index has remained below 50, indicating contraction in demand for design services, since January 2008. Its lowest recent reading was 33.3 in January.

All four U.S. construction sectors tracked by the group, and all four geographic regions, remained below 50 in June.

A measure of inquiries for projects dipped to 53.8 from 55.2, the fourth straight month that inquiries have held at a similar level but have not led to higher billings, as more architecture firms bid for the same projects.

"It appears as though we may have not yet reached the bottom of this construction downturn," AIA Chief Economist Kermit Baker said.

"Architecture firms are struggling and concerned that construction market conditions will not even improve ... next year."

Earlier this month, the architects' trade group cut its 2009 and 2010 forecast for U.S. construction spending.

It predicts a 16-percent decline in construction spending this year, and another 12 percent decline in 2010. In January, the AIA had forecast an 11-percent drop in 2009, followed by a further 5 percent slide next year, but has revised its estimates, citing continued U.S. economic weakness, including steep job losses and tight credit conditions.

The AIA's Billings Index is considered a measure of construction spending nine to 12 months in the future.

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