Architecture Billings Index Up in September

Washington, DC, October 19, 2006--The Architecture Billings Index (ABI), a leading economic indicator of nonresidential construction activity, showed more modest growth in September following a surge in the August figures. Demand for commercial / industrial projects and institutional projects continue to set the pace for the sustained positive conditions. Based on the approximate nine to twelve month lag time between architecture billings and construction spending, the recent growth in billings points to a healthy future in the nonresidential construction market throughout 2007. The American Institute of Architects (AIA) reported the September ABI rating was 51.4 (any score above 50 indicates an increase in billings), and inquiries for new projects was 67.7, its highest mark since December 1995 (68.7). “The last two years have been the longest run of positive business conditions since early 1998 through the end of 2000,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “While the last quarter has seen mostly moderate growth, the inquiries for new projects have been quite strong which suggests that there could be a spike in demand for architectural services in the coming months. The inquiries figure for September is actually the second largest number since the survey began in November of 1995.” Key September ABI highlights: • Regional averages: South (59.3), West (57.6), Northeast (51.7), Midwest (51.1) • Sector index breakdown: commercial / industrial (58.3), institutional (57.8), mixed (54.6), residential (45.4) • Billings inquiries index: 67.7, highest level since December 1995 (68.7) Goldman Sachs steel analyst, Sal Tharani said, “We expect non-residential construction activity to remain robust as indicated by various leading indicators like the Architecture Billing Index and backlogs at the construction steel (long products) fabricators. Unlike the nineties when the activity was primarily led by office construction, the current cycle is driven by schools, warehouses, big box retailers, hotels, and general industrial and manufacturing complexes. We believe that these drivers are more diverse and stable, and should support the non-residential construction sector over a longer period.”

Print the Article