You should probably be sitting down for this because there is some big news regarding the Architecture Billings Index (ABI) that is not for the faint of heart. With that disclaimer out of the way, let’s proceed. So everyone knows that the ABI has really been flexing its muscle this summer—it posted a 52.6 in May and then a 53.5 in June. Those are pretty solid scores given that anything above a 50 indicates an increase in billings, but then July happened—and it happened in a big way. Last month, the ABI posted a 55.8. That’s important news considering the index hasn’t been that high since 2007—since before the whole global financial meltdown.
All good things must come to an end. Following a robust six months, the demand for design services has simmered down. In November, the Architecture Billings Index (ABI) slid from 51.6 in October to 49.8 (any score above 50 indicates an increase in billings). This the second month in a row that the ABI has experienced a small dip.
The slow days of the recession are long gone. Recent figures indicate that September was another robust month for the architecture industry. The Architecture Billings Index (ABI) rose from 53.8 in August to 54.3 (any score above 50 indicates an increase in billings). AIA Chief Economist Kermit Baker said that this upswing in the demand for design services is a reflection of the industry’s new and advanced design and business practices. “The prolonged economic downturn that has affected the design and construction industry has actually resulted in the increased productivity levels as reported by architecture firms,” Baker said.
Recent economic figures from the Architecture Billings Index (ABI) revealed that summer finished on a high note with a significant rise in the demand for design services. The ABI score for the month of August jumped more than a full point from July climbing up to 53.8 from 52.7 (any score above 50 indicates positive growth). AIA Chief Economist, Kermit Baker, sees positive growth for the industry, but remains cautious about the future. “As business conditions at architecture firms have improved eleven out of the past twelve months, it is fair to say that the design professions are in a recovery mode,” Baker said. “This upturn signals an impending turnaround in nonresidential construction activity, but a key component to maintaining this momentum is the ability of businesses to obtain financing for real estate projects, and for a resolution to the federal government budget and debt ceiling impasse.”
Summer isn’t slowing the demand for design services, according to the AIA’s latest economic figures. In fact, numbers are on the rise. The AIA’s Architecture Billings Index (ABI) for July increased more than a full point spike in non-residential construction activity from June’s ABI score of 51.6 to 52.7 (any score above 50 indicates positive growth). Most notably, the new projects inquiry index produced positive results with a substantial increase from 62.6 the previous month to 66.7 in July.
Underscoring the fragility of the economic recovery, the April AIA’s Architecture Billings Index dipped into negative territory for the first time in nine months. The slump to 48.6 was significant, down from 51.9 in March (any score above 50 indicates positive growth).
“Project approval delays are having an adverse effect on the design and construction industry, but again and again we are hearing that it is extremely difficult to obtain financing to move forward on real estate projects,” said AIA Chief Economist, Kermit Baker, in a statement. “There are other challenges that have prevented a broader recovery that we will examine in the coming months if this negative trajectory continues. However, given that inquiries for new projects continue to be strong, we’re hopeful that this is just a short-term dip.”
The Architectural Billings Index (ABI) for June remained in negative territory for the third month in a row. Last month AIA chief economist Kermit Baker expressed concern that the summertime doldrums might mirror a 2011 trend when the ABI lulled after an initially healthy first quarter. Now it looks as though the index is doing just that. “While not all firms are experiencing negative conditions, a large share is still coping with a sluggish and erratic marketplace,” Baker said in a statement. All of the regions of the country and all industry sectors remained in negative territory with the overall index barely budging from May’s 45.8, with June registering at 45.9 (any score below 50 reflects a decrease).
“It’s like déjà vu all over again,” AIA chief economist Kermit Baker said of the steep springtime drop reflected in May’s Architectural Billings Index (ABI). Baker was referring to the trend from 2011, when design activity took a substantial hit after an initially healthy first quarter. “But we don’t want to have a repeat of last year,” he added referring to the sluggish numbers that continued to shadow the profession through the fall. The new numbers were the worst since October and, Baker said, reflect trends in the larger economy.
For the past five months things were looking up for the Architecture Billings Index. Until now. Granted, the index was merely teetering on the positive side of the spectrum at 50.4 for March (any score above 50 reflects an increase), so it didn’t have far to drop into the negative territory of 48.4 for April. Despite the five-month positive stint, throughout the period AIA Chief Economist, Kermit Baker urged cautious optimism in what has clearly been a tepid recovery. In a statement released today, he said that the decline in demand for design services is not surprising considering continued volatility in the overall economy. “Favorable conditions during the winter months may have accelerated design billings, producing a pause in projects that have moved ahead faster than expected,” he said.