Architecture Billings Decline in August

Washington, DC, September 19, 2007--After three months of substantial growth, the Architecture Billings Index (ABI) in August receded to a figure more in line with the scores seen throughout the spring.

As a leading economic indicator of construction activity, the ABI shows an approximate nine to 12 month lag time between architecture billings and construction spending.

The American Institute of Architects (AIA) reported the August ABI rating was 53.9, down significantly from the near record 60.0 in July (above 50 indicates an increase in billings), and inquiries for new projects was 60.5. This is the biggest drop since September 2006.

“This really shouldn’t trigger any concern that demand for nonresidential construction projects will dry up,” said AIA Chief Economist Kermit Baker. “It’s actually characteristic that after consecutive months of very high numbers things level off a bit and return to the more temperate positive conditions that we have seen over most of the year.”

Baker said the apprehension in the industry is based on reports that growing default rates among subprime borrowers in the residential market has made credit more difficult to secure for nonresidential construction projects.

Key August ABI highlights:

• Regional averages: Northeast (61.2), West (58.8), South (56.0), Midwest (52.2)

• Sector index breakdown: commercial / industrial (65.0), institutional (51.6), mixed practice (58.2), multi-family residential (48.7)

• Billings inquiries index: 60.5

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