They’re back! Positive numbers for the Architecture Billings Index (ABI) jumped up in August to 51.4 from a dismal 45.1 in July where it had been stewing in negative land for months. (Anything over 50 indicates positive growth.) Together with a sharp rise as well in Project Inquiries to 56.9 (up from 53.7), the good news seems cautiously solid. “This turnaround in demand for design services is a surprise,” said AIA Chief Economist Kermit Baker. Regional averages, however, remained below the positive bar across the country indicating that firms generally are still struggling. These numbers predate the next injection of stimulus money—whatever shape it takes—which will be sure to give another jolt. Unless, of course, billings are tracking the roller-coaster antics of the stock market.
“The stock market is doing what the economy is doing which is not moving solidly in one direction, either way,” Baker said by phone. “The stop-start that we have seen over the past two years is going to stay with us. I would love to believe that these latest numbers are the start of a Grand Recovery. And maybe they are. The evidence is just not there yet to be sure.”
For the fifth straight month the Architecture Billings Index (ABI) has posted negative figures, with the only positive number on the chart coming from billing inquiries.
The overall number dropped from 46.3 in June to 45.1 in July (any ABI number below 50 is considered negative). AIA Chief Economist Kermit Baker once again pointed to the larger economy as the source of industry woes. “The stuff that’s going on with the national level is consistent with what we’re experiencing,” said Baker, adding that given the current political situation he didn’t think another stimulus package would make it through Congress. “The politics of that is going to be tough; there’s a problem with increased spending,” he said. Even if it did, the last package didn’t really trickle down to the industry. “I have a hunch if there’s a chance it would go through, it would look a lot like the last stimulus and architects didn’t get a lot from that,” he said.
Yesterday we attended a sobering panel at the AIA convention entitled The Construction Outlook: Implications for Architecture Firms. Presented by the AIA’s Chief Economist Kermit Baker and McGraw-Hill Construction’s Vice President of Economic Affairs Robert Murray, the panel crystallized the problems that continue to plague the architecture profession. In short, while the downturn has ended, the upturn, which is indeed inching along, is coming along VERY slowly, or as Murray put it, we’re facing “an extended bottom.” Projected 2011 growth for U.S. construction starts is 1%, according to McGraw-Hill Construction. The high points are multi-family housing, which are projected to see a 22% gain, Manufacturing building, which could see a 24% gain, and commercial building, which is set to see an 11% jump. Other high points include urban infill, adaptive reuse, renovations, and sustainable design. Perhaps the biggest loser in the coming year will be public work, which is seeing cuts across the board due to debt issues. The AIA’s Billing Index has edged just barely into slightly positive territory after three years of steady declines, said Baker. Read More