Architecture Billings Index Posts Negative Score

Washington, D.C., June 21, 2006--For the first time since September 2004, the Architecture Billings Index (ABI) posted a negative score in May. The ABI is a leading economic indicator of nonresidential construction activity based on the approximately six to nine month lag time between architecture billings and construction spending. Previously, it had been positive for nineteen consecutive months and twenty-eight out of the last twenty-nine months. The American Institute of Architects (AIA) reported the May ABI rating was 49.6 (any score below 50 indicates a drop in billings), down sharply from the 54.2 mark in April. “After such a prolonged period of positive business conditions at architecture firms, it is inevitable that the market would soften a bit.” said AIA chief economist Kermit Baker. “Because inquires for new projects continue to be strong this isn’t alarming news. If this pattern continues over the next few months, then there will be greater concerns for the nonresidential construction outlook. But at this point, there are so many construction projects in the pipeline that the industry shouldn’t feel a slowdown yet.” Key May ABI highlights: • Regional averages: South (54.4), Midwest (51.4), West (50.5), Northeast (50.5) • Sector index breakdown: institutional (56.1), commercial / industrial (53.3), mixed (50.5) • Billings inquiries index: 61.3, down slightly from the 62.0 score in April With remarks on how the nonresidential construction market will impact related industries, UBS Investment Bank furniture analyst Susan Maklari said, “We continue to forecast growth in commercial furniture shipments through 2006, despite this month’s slowdown in the ABI. We note that this decline is off of difficult comparisons and that total private nonresidential construction remains positive on a year-over-year basis.”

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