Architecture Billings Index Drops 5 Points

Washington, DC, March 22, 2007--After three consecutive months of unexpectedly high scores, the Architecture Billings Index (ABI), a leading economic indicator of construction activity, dropped more than five points in February. The American Institute of Architects (AIA) reported the February ABI rating was 52.5 (any score above 50 indicates an increase in billings), compared to a score of 57.9 in January. With an approximate nine to twelve month lag time between architecture billings and construction spending, this news should not weaken a forecast that remains favorable for the nonresidential construction market throughout 2007.

“It’s not surprising that the demand for architectural services has eased somewhat given the unusually high level of activity over the last three months,” said AIA chief economist Kermit Baker, PhD, Hon. AIA. “This is likely a reflection of a design and construction market stabilizing due to a return to seasonably cold weather.”

Key February ABI highlights:

• Regional averages: Northeast (65.7), South (57.3), West (51.0), Midwest (50.8)

• Sector index breakdown: mixed practice (59.9), residential (55.6), institutional (53.5), commercial / industrial (51.8)

• Inquiries index: 61.9

Matthew A. Litfin, CFA, principal equity research analyst at William Blair & Company added, “The latest Index dovetail with other macroeconomic trends observable in the United States currently. Solid expansion in architectural billings in February, at a cooler yet perhaps more sustainable growth rate, mirrors recently reported statistics in employment and gross domestic product. This ABI number appears to corroborate a view that non-residential construction growth will expand demonstrably in 2007 and beyond.”

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