Architecture Billings Index Up for Tenth Straight

Washington, DC, December 1, 2005--The Architecture Billings Index (ABI), a leading economic indicator of nonresidential construction activity, showed growth for the tenth consecutive month in October, according to the monthly report from The American Institute of Architects (AIA). The October ABI rating of 57.5 (for diffusion indexes any score above 50 indicates an increase) represents somewhat slower growth than the 60.5 score in September, but exceeds the 57.1 monthly average for 2005 (October 2004 ABI was 53.7, October 2003 ABI was 48.0). Architecture firms that specialize in commercial and industrial projects reported the strongest billings increase, with institutional firms operating at a stable rate, and residential firms experiencing a slowdown in billings activity. Nonresidential construction activity is expected to be a strong economic sector in much of 2006 based on the approximately six month lag time between billings for architectural services and construction activity. With the construction industry accounting for eight percent of U.S. Gross Domestic Product, the ABI should indicate a positive future for industries involved in the construction process, including skilled labor, building materials manufacturers and suppliers, engineering, interior design, and landscaping professionals, commercial office furniture providers, and more. “On top of a spike in transportation costs for construction product delivery, there has been an inflationary effect on building materials with a high petroleum content like PVC piping and asphalt shingles resulting in an added burden on construction related industries,” said AIA Chief Economist Kermit Baker. Robert W. Baird & Co. senior distribution analyst, David J. Manthey, said, “The AIA's outlook for industry growth into 2006 is consistent with what we are hearing from the construction and building materials distribution companies that we follow. Despite risks of higher interest rates and materials prices, the U.S. economic backdrop should remain favorable, and we expect 2006 to be a very solid year for non-residential construction.”

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