The American Institute of Architect’s (AIA) construction index, the Architecture Billings Index (ABI), dropped five points in February after three months of unexpectedly high scores, announced by AIA.
Nonresidential construction market for 2007 still looks favorable even with the 5 percent decreased February ABI rating of 52.5. Any score above 50 indicates an increase in billings. This will not weaken the news for the 2007 forecast, even with an approximate nine to twelve month lag time between architecture billings and construction spending. Plant and noncommercial construction will not suffer from the initial decrease in 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. “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: Industrial/Commercial (51.8)
“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,” added by Matthew A. Litfin, CFA, principal equity research analyst at William Blair & Company.
The Architecture Billings Index is derived from a monthly “Work-on-the-Boards” survey and produced by the AIA Economics & Market Research Group. Based on a comparison of data compiled since the survey’s inception in 1995 with figures from the Department of Commerce on Construction Put in Place, the findings amount to a leading economic indicator that provides an approximately nine to twelve month glimpse into the future of nonresidential construction activity.
For more information go to the AIA website
SOURCE The American Institute of Architects
Nicole Camiola
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